Answer to Question #140487 in Macroeconomics for J

Question

Identify any two reasons that US dollars would be demanded in South Africa.

Answer 1

$$Solution$$

These are some of the reasons that may cause US dollars to be demanded in south Africa/Appreciating US Dollars.

• An increase in gold price brings about high demand of US dollars in South Africa; this is because gold is sold in dollars that is exported. Export price has reduced while import increased in US.
• Many United State tourists visiting South Africa will also lead to increase in demand of the US dollars.
• Also when US buys more of South Africa’s capital goods increases demand for Dollars.
• Unexpected decline in value of the rand relative to dollars.