The US central bank lowers its interest rate. This has an effect on the exchange rate of the US$.
The diagram shows the resulting changes in the demand for and supply of US$ in the foreign exchange market
A change is shown by a move from a curve numbered 1 to a curve numbered 2.
What should curves W, X, Y and Z be labelled to show the effect of the interest rate fall on the exchange rate?
A
2 )
B
3 )
C
4 )
D
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