Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A stronger Euro
B
A weaker Euro
C
No change in the Euro
D
An increase in the supply of Euros
Understanding the Answer
Let's break down why this is correct
Answer
When people want to buy more Japanese Yen, it means they think the Yen is valuable, which makes it stronger. Similarly, if there is an increase in demand for French Euros, it shows that more people want to exchange their money for Euros, making the Euro stronger too. Just like how the Yen becomes more valuable with increased demand, the same thing happens with the Euro in the foreign exchange market. For example, if a lot of tourists want to travel to France, they will exchange their money for Euros, which boosts the Euro's value. Therefore, an increase in demand for Euros would likely lead to a stronger Euro in the foreign exchange market.
Detailed Explanation
When more people want to buy Euros, the value of the Euro goes up. Other options are incorrect because Some might think that more demand could lower value, but that's not true; It's a common mistake to think demand doesn't affect value.
Key Concepts
Foreign Exchange Demand
Currency Appreciation
Trade Balance Impact
Topic
Foreign Exchange Market Dynamics
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.