Currency traders expect the value of the dollar to fall.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?
A)Demand for dollars will increase,and supply of dollars will decrease.
B)Demand for dollars will increase,and supply of dollars will increase.
C)Demand for dollars will decrease,and supply of dollars will increase.
D)Demand for dollars will decrease,and supply of dollars will decrease.

Question

Quizplus · Accepted Answer

When traders expect the value of the dollar to fall, this means there is less demand for the dollar, which leads to a decrease in demand for dollars in the foreign exchange market. As a result, there will be a surplus of dollars, and the supply of dollars in the foreign exchange market will increase. Therefore, the correct choice is C - demand for dollars will decrease, and the supply of dollars will increase.

Currency Traders Expect the Value of the Dollar to Fall