Question

64. which of the following would increase the US demand for foreign currency

a- an increase in the US demand for foreign goods

b- an increase in incomes abroad

c- a decrease in US income

d- a decrease in the US demand for foreign  goods

e- an increase in US real interest rate

Answer 1

Option a

an increase in the US demand for foreign goods

the US consumers demand foreign currency to import goods so the demand for foreign currency increases when the import increases and vice verse.

an increase in incomes abroad increases the supply of foreign currency.

a decrease in the US income decreases the imports and decreases the demand for foreign currency.

an increase in the real interest rate increases the foreign investment in the country which increases the supply of foreign currency.