土豆妮

The factor most likely to cause a nation's currency to appreciate on the foreign exchange market is:

A) an increase in exports relative to imports.

B) an increase in the nation's foreign investment (assets purchased from foreigners).

C) an increase in real interest rates in other countries.

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Demand for foreign currencies comes from demand for things produced by foreigners. For example, the demand for U.S. dollars on the foreign exchange market comes from non-Americans buying things from Americans. If U.S. imports decrease and exports increase, there is an increased demand for U.S. dollars because foreign countries are purchasing more goods from the U.S., thus appreciating the U.S. dollar.