When the foreign exchange value of the dollar is above its equilibrium rate, the U.S. dollar has a tendency to
A) appreciate.
B) depreciate.
C) be revalued.
D) be devalued.
E) be inflated.

Question

Quizplus · Accepted Answer

When the foreign exchange value of the dollar is above its equilibrium rate, it means the dollar is overvalued compared to other currencies. This situation typically leads to a depreciation of the dollar as market forces push its value back towards the equilibrium rate.

When the Foreign Exchange Value of the Dollar Is Above