Refer to U.S. Financial Crisis. What would happen in the market for foreign-currency exchange?
A)the supply of dollars would shift right and the exchange rate would rise.
B)the supply of dollars would shift right and the exchange rate would fall.
C)the supply of dollars would shift left and the exchange rate would rise.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

During a financial crisis, investors often seek safer investments, leading to an increase in the supply of dollars as they sell off U.S. assets. This increased supply causes the exchange rate to fall.