Question

If the demand curve for the Australian dollar relative to the British pound shifted rightwards, this could be caused by:

Select one:

a. Australia increasing it's direct investment in Britain.

b. more portfolio investors in Britain investing in Australia.

c. an increase in British imports purchased by Australia.

d. a decrease in the demand for Australia's exports by Britain.

Answer 1

Answer-

The right answer is option (a) Australia increasing it's direct investment in Britain.
A right ward shift in demand curve implies the value of the currency is high implies appreciation in value of currency. Here investors will be more interested to buy or increases it's investment in another country.
In option (B ) the volatility of the market subject to change the value and there is no direct ownership of the company's assets so the real appreciation of value is not accredited.
In option (C) if imports are increased it leads to trade deficit and running into loss of the economy so the demand shift will never love towards right
In option (D) same as above if demand of exports decline by another country declines the demand curve