Exchange Rates and the Balance of Payments (id: 31b42f121)

本题目来源于试卷: Exchange Rates and the Balance of Payments，类别为 IB经济学

[单选题]

Which of the following would cause the shifts from point $x$to point $z$in the above diagram depicting supply and demand for US$on the foreign exchange market?

A. An increase in remittances leaving the US and a rise in inward foreign direct investment.
B. Quantitative easing
C. A consistently low inflation rate
D. A rise in interest rates


参考答案:  B


本题详细解析:

B

$\underset{‾}{\text{Explanation}}$:
Supply of US dollars has increased, and demand has decreased, causing the dollar to depreciate. Quantitative easing (QE) could cause this as it reduces interest rates, which causes investors to sell dollar-denominated securities (selling dollars increases their supply) for securities that offer a higher return. Demand for dollars would also decrease as QE stimulates AD, which causes a fall in net exports.

Choice A is incorrect as a rise in FDI into the US would increase demand for dollars.

Choice C is wrong because a consistently low inflation rate would make US exports more competitive over time, increasing demand for the dollar.

Choice D is wrong as higher interest rates would attract demand for the US dollar.

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