Question 16 (1 point) Question 16 Unsaved On a graph of the foreign exchange mar

Question

Question 16 (1 point) Question 16 Unsaved On a graph of the foreign exchange market for U.S. dollars, with the horizontal axis measuring the quantity of dollars available for foreign exchange and the vertical axis measuring the exchange rate in euros per dollar, as the dollar appreciates against the euro, the _________ to the foreign exchange market would _____. Question 16 options: quantity of dollars supplied; decrease supply of dollars; increase supply of dollars; decrease quantity of dollars supplied; increase

Explanation / Answer

On a graph of the foreign exchange market for U.S. dollars, with the horizontal axis measuring the quantity of dollars available for foreign exchange and the vertical axis measuring the exchange rate in euros per dollar, as the dollar appreciates against the euro, the "quantity of dollars supplied" to the foreign exchange market would "increase".

Because, as the dollar appreciates against the euro, it would fetch more euro for each unit of dollar and hence more people will be willing to exchange their dollars for euro, thereby increasing the quantity of dollars supplied to the foreign exchange market.

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