A financial market panic that causes US depositors to withdraw their funds from Chinese banks,would cause a(n)________ in the demand of US dollars and a(n)_________in the demand of the Chinese Yuan.
A)Increase;Increase
B)Increase;Decrease
C)Decrease;Increase
D)Decrease;Decrease

Question

A financial market panic that causes US depositors to withdraw their funds from Chinese banks,would cause a(n)________ in the demand of US dollars and a(n)_________in the demand of the Chinese Yuan.​
A)​Increase;Increase
B)Increase;Decrease
C)Decrease;Increase
D)​Decrease;Decrease

Quizplus · Accepted Answer

If a financial market panic causes US depositors to withdraw their funds from Chinese banks, it would lead to an increase in demand for US dollars as the depositors will convert the Chinese Yuan into US dollars before withdrawing their funds, and a decrease in demand for Chinese Yuan as the depositors will be less willing to hold Yuan due to the panic, and will likely convert them into other currencies or assets.

A Financial Market Panic That Causes US Depositors to Withdraw