Asked by Gilberto Camacho on May 08, 2024
Verified
Which of the following will generate a demand for country X's currency in the foreign exchange market?
A) travel by citizens of country X in other countries
B) the desire of foreigners to buy stocks and bonds of firms in country X
C) the imports of country X
D) charitable contributions by country X's citizens to citizens of developing nations
Foreign Exchange Market
The global marketplace for buying and selling national currencies, determining exchange rates.
Country X's Currency
The official medium of exchange issued and controlled by a particular country, identified uniquely to that country.
Stocks and Bonds
Financial instruments that represent ownership in a company or a debt owed by an entity, respectively.
- Assess how changes in exchange rates affect global trade dynamics.
Verified Answer
MA
Muhammad AsgharMay 14, 2024
Final Answer :
B
Explanation :
The desire of foreigners to buy stocks and bonds of firms in country X will generate a demand for country X's currency in the foreign exchange market, as they need to exchange their own currency for country X's currency to make these investments.
Learning Objectives
- Assess how changes in exchange rates affect global trade dynamics.