4. (10) True or False and Explain. All credits will be given to your explanations. 1. An increase in exchange rate will

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4 10 True Or False And Explain All Credits Will Be Given To Your Explanations 1 An Increase In Exchange Rate Will 1 (82.68 KiB) Viewed 21 times

4. (10) True or False and Explain. All credits will be given to your explanations. 1. An increase in exchange rate will cause a shift in the demand curve for foreign exchange to the right. 2. Exchange rate appreciation means domestic currency is getting stronger and the foreign currency depreciates accordingly. 3. If US citizens like more our Canadian goods, then the supply of foreign exchange will shift to the right causing the equilibrium ER to drop and the equilibrium quantity of foreign exchange to increase 4. A favorable (positive) demand shock for foreign exchange will cause the demand curve for foreign exchange to shift to the right. This will immediately lead to a surplus in foreign exchange, which will push ER up. 5. A positive demand shock coupled with a negative supply shock should lead to an increase in ER and a drop in the foreign exchange quantity.