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Macroeconomics

Lesson 3: The foreign exchange market

The foreign exchange market

The currency of Hamsterville is the Hamsterville Snark (

S N

If citizens of Hamsterville want to buy U.S. goods, what happens in the market for the Snark and in the market for the U.S. dollar?

(Choice A)
No impact on the market for snarks; the United States supplies and demands dollars in the market for dollars
(Choice B)
Hamsterville supplies snarks in the market for snarks; Hamsterville demands dollars in the market for dollars
(Choice C)
No impact on the market for snarks; Hamsterville demands U.S. dollars in the market for dollars
(Choice D)
Hamsterville supply snarks in the market for snarks; the United States demands dollars in the market for U.S. dollars
(Choice E)
Hamsterville demands snarks in the market for snarks; Hamsterville supplies dollars in the market for dollars