Question

Which of the following is most likely to occur when firms in other countries want to build factories in the united states or purchase u.s. financial securities? group of answer choices

O the demand for foreign currencies in the u.s.
O will decrease and the dollar will appreciate the demand for foreign currencies in the u.s.
O will increase and the dollar will depreciate the demand for the dollar will decrease in other countries and the dollar will depreciate the demand for the dollar
O will increase in other countries and the dollar will appreciate

Answer 1

When firms in other countries want to build factories in the United States or purchase U.S. financial securities, the most likely outcome is that the demand for the dollar will increase in other countries and the dollar will appreciate.

option b i the correct

Step-by-step explanation:

In the foreign exchange market, when firms in other countries want to build factories in the United States or purchase U.S. financial securities, the most likely outcome is that the demand for the dollar will increase in other countries and the dollar will appreciate.

This is because when foreign firms want to invest in the U.S., they need to exchange their domestic currency for U.S. dollars. The increased demand for dollars leads to an increase in the value of the dollar compared to other currencies, which is known as appreciation.

For example, if a Japanese company wants to build a factory in the U.S., it will need to convert its yen into dollars to purchase the necessary land and equipment. This increases the demand for dollars and strengthens the value of the dollar.