Asked by huhhf3;q

Which of the following correctly explains how the dollars-per-euro exchange rate will change in the near future if the exchange rate is expected to rise? (1 point)

The expectation of an appreciating euro increases the demand for euros and decreases the supply of euros on the foreign exchange market. The result is a higher exchange rate in the near future.

The expectation of an appreciating euro increases the supply of euros and decreases the demand for euros on the foreign exchange market. The result is a higher exchange rate in the near future.

The expectation of an appreciating euro increases the demand for euros and decreases the supply of euros on the foreign exchange market. The result is a lower exchange rate in the near future.

The expectation of an appreciating euro increases the supply of euros and decreases the demand for euros on the foreign exchange market. The result is a lower exchange rate in the near future.

All Answers 1

Answered by GPT-5 mini AI
The first option.

Expecting the euro to appreciate makes people want to buy euros now and causes euro holders to hold back sales, so demand rises and supply falls — pushing the dollars-per-euro exchange rate higher.