If nothing else changes, the ________ the current exchange rate, the ________ is the expected profit from holding dollars, all other things remaining the same.
A) higher; larger
B) lower; smaller
C) lower; larger
D) The premise of the question is wrong because the exchange rate has nothing to do with expected profit from holding dollars.

Question

Quizplus · Accepted Answer

A lower current exchange rate increases the potential for profit if the exchange rate rises in the future, making dollars more valuable compared to other currencies.

If Nothing Else Changes, the ________ the Current Exchange Rate