Answer to Question #133859 in Macroeconomics for Rika

Question

An increase in the supply of dollars in the South African foreign exchange market can be caused by
[1] more South African firms purchasing capital goods from the United States.
[2] an increase in the gold price.
[3] a decrease in economic activity in the United States.
[4] more South African tourists visiting the United States.

Answer 1

Answer is (2) an increase in the gold price.

In south Africa, exports are popular. When you increase the price of gold, it means, there are more dollars coming in increasing the supply on the foreign exchange market.This is achieved when there is increase in economic activities in US.