Multiple Choice
Figure 11-4 
-Refer to Figure 11-4. In Panel (b) , assume that the price of bonds rises from P1 to P2. Now, in Panel (c) , the higher price of bonds will
A) reduce the demand for and increase the supply of dollars and cause the exchange rate to increase.
B) reduce the demand for and increase the supply of dollars and cause the exchange rate to rise.
C) increase the demand for and reduce the supply of dollars and cause the exchange rate to increase.
D) reduce the demand for and increase the supply of dollars and cause the exchange rate to fall.
Correct Answer:
Verified
Correct Answer:
Verified
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