Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model to the right?
a. the expected rate of return on U.S. assets rises
b. the exchange rate falls
c. the expected rate of return on U.S. assets falls
d. the exchange rate rises

When the dollar loses value, there is higher demand for foreign imports in a country because they become cheaper. When the dollar gains in value, a foreign country´s exports increase. Changes in the value of currencies reflect changes in demand and supply. An increase in exports will shift the demand curve of the dollar higher. A reduction of imports will have a contrary effect.

OlanmaE OlanmaE · Answer 2 · 2022-03-24T12:26:02+01:00

When there is a shift in the supply of dollar for foreign currency exchange to the right, the exchange rate rises.

What is an Exchange rate?

This is the rate in which a particular currency would exchange another currency. In most cases, these currencies are national currencies paired against another national currency.

When dollar loses value, there woukd be a high demand for import in a country because they tend to become cheaper. When the dollar gains, the foreign currency increases.

Learn about Exchange rate here:

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