If Germans purchase many additional U.S. automobiles next year, Select one: a. the supply of dollars...

If Germans purchase many additional U.S. automobiles next year,

Select one:

a. the supply of dollars currently in the New York currency market remains constant.

b. the freely-floating euro to dollar exchange rate would become pegged

c. the U.S. trade surplus next year will most certainly increase.

d. the demand for dollars in the Frankfurt currency market will most likely increase

Solutions

Expert Solution

option d is correct

if Germans are buying US automobiles, they are selling the Euros and buying US dollars for the imports. this what happens at the currency market. Due to excess buying of US dollars, the demand increases for US dollars in the market.

jeff jeffy answered 1 year ago

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