Which of the following statements about the foreign exchange ...

[debasdf]

Which of the following statements about the foreign exchange market is correct?
 
  A) The higher the expected future exchange rate, the smaller is the expected profit from holding dollars and so the smaller is the demand for dollars.
  B) The higher the expected future exchange rate, the greater is the expected profit from holding dollars and so the greater is the demand for dollars.
  C) The higher the expected future exchange rate, the smaller is the expected profit from holding dollars and so the greater is the demand for dollars.
  D) The lower the expected future exchange rate, the smaller is the expected profit from holding dollars and so the greater is the demand for dollars.
  E) The lower the expected future exchange rate, the greater is the expected profit from holding dollars and so the greater is the demand for dollars.

Question 2

A(n) ________ in U.S. prices will cause an increase in the demand for U.S. dollars and a(n) ________ in the (per dollar) exchange rate.
 
  A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

[lkanara2]

Answer to Question 1

B

Answer to Question 2

C

[debasdf]

Great answer, keep it coming

[kishoreddi]

Wow, this really help