Asked by elizabeth mccloskey on Jul 27, 2024
Verified
U.S. exports create a
A) supply of foreign currencies and a demand for dollars in the foreign exchange markets.
B) demand for foreign currencies and a supply of dollars in the foreign exchange markets.
C) supply of foreign currencies and a supply of dollars in the foreign exchange markets.
D) demand for foreign currencies and a demand for dollars in the foreign exchange markets.
Foreign Exchange Markets
Platforms for trading national currencies against one another, critical for international trade and finance.
U.S. Exports
Goods, services, and commodities sent from the United States to other countries as part of international trade.
- Familiarize oneself with the workings of foreign exchange markets, including the factors influencing currency supply and demand and the effect of exports and imports on exchange rates.
Verified Answer
SA
Sireen AwawdaJul 28, 2024
Final Answer :
A
Explanation :
When the U.S. exports goods and services to another country, they receive payment in the currency of that country. This creates a supply of foreign currencies, as these currencies are being brought into the foreign exchange market. At the same time, those who wish to purchase U.S. goods and services will need to exchange their own currency for U.S. dollars, creating a demand for dollars in the foreign exchange market. Therefore, Option A is the correct choice.
Learning Objectives
- Familiarize oneself with the workings of foreign exchange markets, including the factors influencing currency supply and demand and the effect of exports and imports on exchange rates.