|
Title: Explain and show graphically how an increase in incomes in the United States will affect equilibrium Post by: Tidy on Jun 22, 2015 Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?
Title: Re: Explain and show graphically how an increase in incomes in the United States will affect equilib Post by: Sydnie on Jun 28, 2015 Higher incomes in the United States will increase demand for imports in the United States. The increased demand for imported goods will result in an increase in the supply of dollars (shift the supply curve to the right) as Americans trade in their dollars for the currencies of the countries from which they wish to purchase goods. The increase in supply results in a decrease in the equilibrium exchange rate (the dollar depreciates), and an increase in the equilibrium quantity of dollars traded.
|