Question 6 2.5 p 1.17 048 Qa Quarelity Cerillions of dollars per day) The figure

Question

Question 6 2.5 p 1.17 048 Qa Quarelity Cerillions of dollars per day) The figure above shows the market for foreign exchange in 2001 and 2009. Which of the following could have led to the shifts illustrated in the figure above? i. The U.S. exchange rate was expected to depreciate between 2001 and 2009 i. The US. exchange rate was expected to appreciate between 2001 and 2009. ili. The U.S. interest rate fell relative to interest rates in other countries between 2001 and 2009 i only ii only ilionly i and ii ili and ii 10

Explanation / Answer

The figure is not clear in the diagram posted by you.

If there is downward shift in the Demand curve D then the correct options will be:-

I and III

Reason:- the decreased demand in Dollar will decrease the exchange rate of Dollar and when the interest rate of the economy is lower than the interest rate of other countries, the exchange rate will fall.

P.S.:- Please post the clearer picture so that I can be sure.

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