prettygirls1568 prettygirls1568
  • 21-08-2020
  • Business
contestada

n an open economy, why is the supply curve for dollars in the foreign-currency exchange market vertical?

Respuesta :

sebastiansierraocm
sebastiansierraocm sebastiansierraocm
  • 22-08-2020

Answer:

In an open economy, the supply curve for dollars in the foreing-currency exhange market is vertical, because the supply does not depend on the exchange currency rate.

The supply of dollars in an open economy depends on the interest rate, which is determined by the difference between imports and exports (which is the same as the difference between purchases and sales of foreign capital).

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