Indian Airlines plans to buy 23 planes from Airbus, the European producer of airlines. The currency of India is the rupee. The currency of the European Union is the euro. In the foreign exchange market for euros, what happens to the rupees per euro exchange rate?

Question

Answer

The demand for euros increases, and the exchange rate starts to rise.

Answer

As the exchange rate starts to rise, the quantity of euros supplied increases.

Answer

The supply of euros decreases and the exchange rate starts to rise.

Answer

As the exchange rate starts to rise, the quantity of euros demanded decreases.

Answer

Both A and B occur.

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Indian Airlines plans to buy 23 planes from Airbus, the European producer of air...

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