Introduction to the foreign-currency exchange market 2. Introduction to the foreign-currency exchange marketIn an open economy, why is the demand curve for dollars in the foreign-currency exchange market downward sloping?O A depreciation in the domestic currency causes exports to fall and imports to rise and, therefore, net exports to fall.O A depreciation of the dollar reduces the quantity of dollars demanded in the market for foreign-currency exchange.O When the value of the domestic currency depreciates, domestic goods become less expensive relative to foreign goods, making domesticgoods more attractive to domestic and foreign consumers.O Net capital outflow equals net exports.

An open economy is an economy where economic activities occur among the domestic and outside…

2. Introduction to the foreign-currency In an open economy, why is the demand curve for dollars in the foreign-currency exchange market downward sloping? O A depreciation in the domestic currency causes exports to fall and imports to rise and, therefore, net exports to fall. A depreciation of the dollar reduces the quantity of dollars demanded in the market for foreign-currency exchange. O When the value of the domestic currency depreciates, domestic goods become less expensive relative to foreign goods, making domestic goods more attractive to domestic and foreign consumers. ONet capital outflow equals net exports.

2. Introduction to the foreign-currency In an open economy, why is the demand curve for dollars in the foreign-currency exchange market downward sloping? O A depreciation in the domestic currency causes exports to fall and imports to rise and, therefore, net exports to fall. A depreciation of the dollar reduces the quantity of dollars demanded in the market for foreign-currency exchange. O When the value of the domestic currency depreciates, domestic goods become less expensive relative to foreign goods, making domestic goods more attractive to domestic and foreign consumers. ONet capital outflow equals net exports.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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