Answer to Question #251628 in Macroeconomics for Sante

Question

Explain, with the aid of a graph, what will happen to the rand/dollar exchange rate and the

equilibrium quantity of dollars if South African exports to the United States increase.

Answer 1

The value of rand goes up and thus the equilibrium of a dollar exchanged in the foreign market also increases. This is due to high demand for dollars in South Africa where exports are coming from, and also there is high demand for rand in the United States who are importing from South Africa.

When exports from South Africa to US increase, the demand for dollars increases steadily.