In the open-economy macroeconomic model,the demand for dollars shifts right if at any given exchange rate
A)foreign residents want to buy more U.S.goods and services.
B)U.S.residents want to buy fewer foreign goods and services.
C)Both A and B are correct.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

If foreign residents want to buy more U.S. goods and services, they will need to first acquire dollars. This will increase the demand for dollars in the foreign exchange market, and the demand curve for dollars will shift to the right. Similarly, if U.S. residents want to buy fewer foreign goods and services, this will decrease the supply of dollars in the foreign exchange market (since they will not need to exchange as many dollars for foreign currency), and the demand curve for dollars will shift to the right. Therefore, both A and B are correct.

In the Open-Economy Macroeconomic Model,the Demand for Dollars Shifts Right