Question Completion status: o e. increase from Y2 to Y3 QUESTION 32 The followin

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Question Completion status: o e. increase from Y2 to Y3 QUESTION 32 The following figure depicts the demand for us dollars in the foreign curencr exchange morke. use this figure to orswer the questions that follow Price Mexican pesos per Us. dollar Quantity (U.S. dollars If interest rates in the Urited States rise relative to interest rates in Mexico and, atthe same time, Mexican consumer demand for U.s, goods decreases the dernand curve in the figure above: a will not shift because interests rates only affect the supply cu &will; not shift because interests fates are not re can either increase from D to P2 or decrease from DitoDs to exchange ra ing on the relätive magnitude of the two effects rease trom o e will decrease from P1 to Da orek Sove ond Sutma to sow ond suBmit crok Sawt Anarers search REDESIGNED. RELIABLE ADY FOR YOU

Explanation / Answer

An increase in the interest rate will increase the demand for the US Dollar but a decrease in the demand for US good will decrease the demand for the US dollar.

The answer is "C"

Can either increase from D1 to D2 or decrease from D1 to D3 depending on the relative magnitude of the two.

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