Question

1-Which would increase supply of the U.S.? dollar?

A.an expectation that the rupee will depreciate relative to dollar the in the future

B.a decrease in the U.S. interest rate relative to the Indian interest rate

C.both of these

D.neither of these

2-Which would increase supply of the European? euro?

A.neither of these

B.both of these

Can expectation that the euro will depreciate relative to dirham the in the future

D.a decrease in the U.A.E. interest rate relative to the European interest rate

3-Which would increase demand for the U.A.E.? dirham?

A.an expectation that the dirham will appreciate relative to the euro in the future

B.neither of these

C.an increase in the U.A.E. interest rate relative to the European interest rate

D.both of these

4-Which would increase demand for the British? pound?

A.an increase in the Japanese interest rate relative to the British interest rate

B.an expectation that the yen will appreciate relative to the pound in the future

C.neither of these

D.both of these

Answer 1

Ans

1 B because people will purchase rupees with dollars to invest in India to get higher interest there. This will increase supply of dollars

2 can because people will sell euro to invest in dirham so as to earn profits in future when they can exchange same dinnars for more euros

3 both of these. First because people will try to have dinars to exchange for more euros in future and thus earn profits. Similarly people will try to invest in UAE to earn higher interest rates there. Thus will led to more demand for dinars

4 neither of these because both will decrease demand for pound