Which of the following will cause an increase in the demand for the Venezuelan currency, the Venezuelan bolivar?
A) real interest rates in Venezuela fall
B) U.S. residents change preferences in favor of goods produced in the United States
C) real interest rates in the United States increase
D) none of the above

Question

Quizplus · Accepted Answer

A decrease in real interest rates in Venezuela would make the Venezuelan bolivar less attractive and thus decrease its demand. A change in U.S. resident preferences towards U.S. goods has no direct impact on the demand for the Venezuelan bolivar. An increase in real interest rates in the United States would make the U.S. dollar more attractive and thus decrease the demand for the Venezuelan bolivar. Hence, none of the given options would cause an increase in the demand for the Venezuelan currency.

Which of the Following Will Cause an Increase in the Demand