if-the-income-of-a-foreign-country-increases-how-does-this-affect-the-demand-for

Question

If the income of a foreign country increases, how does this affect the demand for US dollars and the exchange rate?

Accepted Answer

Demand for US dollars increases, leading to a higher exchange rate.

Answer

Demand for US dollars remains unchanged, and the exchange rate stays the same.

Answer

Demand for US dollars decreases, leading to a lower exchange rate.

Answer

Demand for US dollars increases, but the exchange rate decreases.