ECS1601 ASS 2

What impact is the increase in the supply of Dollars on price and the supply curve’s direction? • The price of the Dollar becomes relatively lower. • The Rand appreciates against the Dollar. • The supply curve for the Dollar will shift to the left. • The equilibrium point will be lower down on the Dollar demand curve. Statement a and b. All the statement s are correct. Statement s b and c are correct. Statements b, c and d are correct. Statements b and d are correct. When the supply of dollars increases it means that the price of dollars becomes relatively lower in rand terms and therefore the rand appreciates.This can be illustrated by a leftward shift of the dollar supply curve, and a new equilibrium point lower down on the dollar demand curve. QR 2 Suppose that the Euro/US Dollar exchange rate changes from 1,3 Euro per Dollar to 1,1 Euros per Dollar. Then a. the euro has appreciated against the dollar. b. the dollar has strengthened against the euro. c. the euro has weakened against the dollar. d. the dollar has appreciated against the euro. e. the price of the dollar has become expensive in terms of the euro