Which of the following factors is most likely to have caused the change shown in the diagram below? The Market for Malaysian Ringgit

Question

BlackTom AI · Accepted Answer

An increase in US tourists to Malaysia raises foreigners' demand for Malaysian ringgit (RM) because visitors must buy RM to pay for hotels, food and activities; this is exactly the cause that shifts the demand curve for RM to the right.

1) Relevant knowledge points and concepts
- Foreign exchange market: the demand curve for a currency represents foreigners wanting that currency to buy domestic goods, services, or assets; the supply curve represents residents selling that currency to buy foreign goods, services, or assets.  
- A rightward shift in demand for RM means higher quantity of RM demanded at each exchange rate and a higher equilibrium exchange rate (US$ per RM) — the RM appreciates against the US$.

2) Step-by-step reasoning process
- If US residents demand more Malaysian holidays, they need more RM to spend in Malaysia.  
- This increases foreign demand for RM, shifting the demand curve for RM right (from D0 to D1 on the diagram).  
- The new intersection with the unchanged supply curve occurs at a higher exchange rate (more US$ per RM) and larger quantity of RM traded.

3) Intermediate steps (diagram to economic effect)
- Demand: D0 -> D1 (rightward shift).  
- Equilibrium: (E0) -> (E1) moves up and right.  
- Outcome: RM appreciates (higher US$/RM) and traded quantity increases.

4) Why the correct answer is correct
- Option c directly increases foreigners’ demand for RM (tourists buying RM), matching the shown rightward demand shift and resulting appreciation on the diagram.

5) Why other options are incorrect
- a) Faster Malaysian income growth increases Malaysians’ imports (they sell RM for foreign currency), shifting the supply of RM right, causing depreciation — not the diagram shown.  
- b) Malaysian rates falling while US rates rise would reduce capital inflows to Malaysia (lower demand for RM) and increase capital outflows — this shifts demand left or supply right, causing depreciation, opposite to the diagram.  
- d) Lower US inflation relative to Malaysia makes US goods relatively cheaper; US demand for Malaysian goods/services would tend to fall (less demand for RM), again shifting demand left, not right.

6) Conclusion
These steps confirm that increased US demand for holidays in Malaysia (option c) explains the rightward demand shift and exchange-rate movement shown. The correct answer is c.

Which of the following factors is most likely to have caused the change shown in the diagram below? The Market for Malaysian Ringgit单项选择题

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Which of the following factors is most likely to have caused the change shown in the diagram below? The Market for Malaysian Ringgit单项选择题

类似问题

A floating exchange rate is

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更多留学生实用工具

希望你的学习变得更简单

Choose the combination of two words that best fill the gaps in the following sentence: If the Australian exchange rate falls (Australian dollar depreciates), the price to foreigners of Australian produced goods and services and so the quantity of Australian dollars demanded .