### Quiz: Factors Influencing U.S. Demand for Foreign Currency**Question:**Which of the following would increase the U.S. demand for foreign currency?**Options:**- **a.** an increase in U.S. real interest rate- **b.** an increase in incomes abroad- **c.** a decrease in the U.S. demand for foreign goods- **d.** an increase in the U.S. demand for foreign goods- **e.** a decrease in U.S. income### Explanation:For this multiple-choice question, consider the following scenarios:- **U.S. Real Interest Rate:** Changes in the U.S. real interest rate can affect how attractive U.S. investments are relative to foreign assets, potentially influencing currency demand.- **Incomes Abroad:** When incomes abroad increase, residents of those countries may increase their consumption, including goods from the U.S., affecting demand for the currency.- **Demand for Foreign Goods (U.S.):** If the U.S. demand for foreign goods rises, Americans would need more foreign currency to pay for these goods.- **U.S. Income Changes:** Changes in U.S. income levels can impact the overall demand for goods and services, affecting currency needs.Given these options, the correct answer highlights a factor that directly increases the demand for foreign currency by Americans.

The foreign exchange is required to make international payments. Demand for foreign exchange rises…

ich of the following would increase the U.S. demand for foreign currency? O a. an increase in U.S. real interest rate b. an increase in incomes abroad Oc. a decrease in the U.S. demand for foreign goods d. an increase in the U.S. demand for foreign goods e. a decrease in U.S. income

ich of the following would increase the U.S. demand for foreign currency? O a. an increase in U.S. real interest rate b. an increase in incomes abroad Oc. a decrease in the U.S. demand for foreign goods d. an increase in the U.S. demand for foreign goods e. a decrease in U.S. income

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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