A factor that helps to determine the demand for U.S. dollars in the foreign exchange market is
A) the expected future exchange rate.
B) the expected future interest rate.
C) the amount of U.S. imports.
D) the supply of U.S. dollars.

Question

Quizplus · Accepted Answer

The expected future exchange rate influences demand for U.S. dollars because if people expect the dollar to strengthen, they will want to hold more dollars now to benefit from the anticipated appreciation.

A Factor That Helps to Determine the Demand for U