Question

Which of the following would shift the supply of dollars in the market for foreign-currency exchange of the open-economy macroeconomic model to the left? Select one: a. The exchange rate rises. b. The expected rate of return on U.S. assets rises. c. The expected rate of return on U.S. assets falls. d. The exchange rate falls.

Answer 1

b. The expected rate of return on U.S. assets rises

Step-by-step explanation:

• An open economy is one that interacts freely with the other economies of the world, the one economy of the united states is very large and includes the imports and exports of huge quantity including the goods and services.

• In an open economy, macroeconomic model assets are bought and supplied to the economy a this creating an outflow of the capital as more of the buying of the assets creates a net capital outflow leading to an increase of the expected rate of return of assets. As the country can spend more than it produces.