1. Suppose that the equilibrium exchange rate between the United States and South African is 15.13 Rand per US dollar. Further suppose that the two countries are trading partners with each other. Inflation now rises in South Africa. Which of the following answer choices correctly represents the shift that would occur in the US foreign exchange market? The supply of US dollars would fall. The demand for South African Rands would rise. The supply of South African Rands would rise. The supply of US dollars would rise.

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1. Suppose that the equilibrium exchange
rate between the United States and
South African is 15.13 Rand per US dollar.
Further suppose that the two countries
are trading partners with each other.
Inflation now rises in South Africa. Which
of the following answer choices correctly
represents the shift that would occur in
the US foreign exchange market?
The supply of US dollars
would fall.
The demand for South
African Rands would rise.
The supply of South African
Rands would rise.
The supply of US dollars
would rise.
Transcribed Image Text:1. Suppose that the equilibrium exchange rate between the United States and South African is 15.13 Rand per US dollar. Further suppose that the two countries are trading partners with each other. Inflation now rises in South Africa. Which of the following answer choices correctly represents the shift that would occur in the US foreign exchange market? The supply of US dollars would fall. The demand for South African Rands would rise. The supply of South African Rands would rise. The supply of US dollars would rise.
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