Question

In: Economics

If investors expect the future value of the U.S. dollar to decrease relative to the value...

If investors expect the future value of the U.S. dollar to decrease relative to the value of the euro, everything else held constant, this would cause all of the following EXCEPT:

Select one:

the U.S. dollar to depreciate against the euro today

the supply of the U.S. dollars to decrease today

the demand for the U.S. dollars to decrease today

the euro to appreciate against the U.S. dollar today

Clear my choice

Solutions

Expert Solution

False statement is "the supply of the U.S. dollars to decrease today”

The supply of US dollar to increase today if future expectations about dollar to weaken rises. The holder of US dollars are less willing to hold the currency which causes the supply of US dollar to increase in FX market.

Rahul Sunny answered 2 years ago
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