If the U.S.were to impose import quotas
A)the demand for loanable funds and the demand for dollars in the market for foreign-currency exchange would both increase.
B)nether the demand for loanable funds nor the demand for dollars in the market for foreign-currency exchange would increase.
C)the demand for loanable funds would increase,but the demand for dollars in the market for foreign-currency exchange would not.
D)the demand for dollars in the market for foreign-currency exchange would increase,but the demand for loanable funds would not.

Question

Quizplus · Accepted Answer

When the U.S. imposes import quotas, it limits the amount of imports that can be brought into the country. This means that importers will need to buy more dollars to purchase the limited amount of goods available, leading to an increase in the demand for dollars in the market for foreign-currency exchange. However, there is no direct impact on the demand for loanable funds.

If the U.S.were to Impose Import Quotas