-In the figure above, the shift in the demand curve for U.S. dollars from D₀to D₁could occur when A) people expect that the dollar will depreciate. B) the expected future exchange rate increases. C) foreign interest rates increase. D) the U.S. interest rate falls.

Question

Quizplus · Accepted Answer

An increase in the expected future exchange rate makes holding U.S. dollars more attractive, leading to an increase in demand for dollars, shifting the demand curve from D0 to D1.

-In the Figure Above, the Shift in the Demand Curve