Which of these help explain why the supply curve for currency is upward-sloping? A depreciated currency causes:

Question

BlackTom AI · Accepted Answer

An upward-sloping supply curve for a currency reflects that as the exchange rate moves toward a depreciation of the domestic currency (i.e., the domestic price of a unit of foreign currency rises), the quantity of domestic currency offered in the foreign-exchange market rises. Key concepts: the exchange rate definition, how depreciation changes relative prices of imports and exports, and the mechanical requirement of selling domestic currency to obtain foreign currency.

Step-by-step reasoning:
1) Define exchange rate: let e = domestic currency per unit of foreign currency. A rise in e means depreciation of the domestic currency.
2) Mechanical effect: when e rises, each unit of foreign currency costs more domestic currency. To buy the same amount of foreign currency for imports, domestic buyers must sell more units of domestic currency. Thus quantity of domestic currency supplied to the FX market increases as e rises — the core reason the supply curve slopes upward. This matches the option “need to sell more domestic currency to get foreign currency.”
3) Relative price effect on imports: depreciation raises the domestic-currency price of foreign goods. Higher prices reduce domestic demand for imports (consumers buy less foreign goods). That behavioral response is consistent with movement along the FX curves and contributes to the reallocation and adjustment of trade flows that coexist with the upward-slope mechanism — this corresponds to “less foreign goods will be purchased.”
4) Effect on exports/pricing: depreciation changes the price relationships for exports. Measured in domestic currency terms, exporters receive more domestic currency per unit of foreign-currency revenue; in many contexts firms adjust prices and volumes in response, altering cross-border flows and reinforcing why exchange-rate changes are associated with changes in quantities supplied/sold in the FX market. This links to the option “exports to cost more” when viewed in domestic-currency pricing terms.

Why the correct answer is correct:
Each listed consequence is a true outcome or perspective of a currency depreciation and together they explain the mechanism behind an upward-sloping supply curve: the need to sell more domestic currency per unit of foreign currency, changes in import demand, and altered export pricing/flows. The collective set of effects is captured by “all of these.”

Why other options alone are incomplete:
- “Need to sell more domestic currency to get foreign currency” is correct but only states the mechanical reason.
- “Less foreign goods will be purchased” is a behavioral consequence but not the full mechanical explanation.
- “Exports to cost more” describes pricing effects but not the exchange-mechanism itself.
Combining them gives the full picture.

Conclusion: therefore the best choice is “all of these,” which matches the provided answer.

Which of these help explain why the supply curve for currency is upward-sloping? A depreciated currency causes:单项选择题

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