Given a system of floating exchange rates rising income in the United States would trigger a (an) ?
Correct answer: A. increasing in the demand for imports and an increasing in the demand for foreign currency
- A. increasing in the demand for imports and an increasing in the demand for foreign currency
- B. increase in the demand for imports and decrease in the demand for foreign currency
- C. decrease in the demand for imports and an increase in the demand for foreign currency
- D. decrease in the demand for imports and a decrease in the demand for foreign currency
Explanation
Higher U.S. income increases purchases of both domestic and imported goods, so import demand rises. Paying for those imports increases demand for foreign currency.
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