Answer to Question #134875 in Macroeconomics for December

Question

A sudden increase in the number of tourists from South Africa to United States (US) will lead to…
[1] an appreciation of the dollar and a leftward shift of the supply of Rand curve on the US
foreign exchange market.
[2] a depreciation of the dollar and a leftward shift of the supply of Rand curve on the US foreign
exchange market.
[3] an appreciation of the dollar and a rightward shift of the supply of Rand curve on the US
foreign exchange market.
[4] a depreciation of the dollar and a rightward shift of the supply of Rand curve on the US
foreign exchange market.

Answer 1

Solution

(4)a depreciation of the dollar and a rightward shift of the supply of Rand curve on the US foreign exchange market.

Because there are sudden change in tourism form south Africa so if there will be fall in dollar then tourism will be more attract toward US.so due to fall in dollar rate demand of dollar increase.

increase in the US dollar demand for the rand (rightward shift of the demand curve) causes a rise in the exchange rate, an appreciation in the rand, and a depreciation in the dollar.