Final answer:
Indirect exchange rate quotations from the U.S. perspective are the price of one U.S. dollar in terms of the foreign currency. This exchange rate influences international trade and investment by affecting the demand for U.S. dollars and the supply of them in the foreign exchange market. The correct option is B.
Step-by-step explanation:
Indirect exchange rate quotations from the U.S. perspective are defined as B. the price of one U.S. dollar in terms of the foreign currency. In other words, it tells us how much foreign currency is required to purchase one U.S. dollar. This is crucial in the foreign exchange market where businesses and individuals trade currencies for international trade and investment purposes.
The demand for U.S. dollars might come from U.S. export firms converting their foreign earnings back into dollars or from foreign investors seeking to make investments in the U.S. On the other hand, the supply of U.S. dollars is influenced by foreign firms earning dollars through sales in the U.S., or by U.S. tourists and investors spending or investing abroad.
An appreciation of the U.S. dollar means foreigners have to pay more for dollars, which generally reduces U.S. exports because U.S. goods become more expensive in terms of foreign currency. Conversely, if the U.S. dollar depreciates, the opposite is true, making U.S. goods cheaper abroad and potentially increasing exports.