Options:

a decrease

no change

an increase

5. Movement to new equilibrium Suppose that the United States suffers from a rapid inflation. This will likely lead to in the demand for the U.S. dollar and in the supply of the U.S. dollar. Adjust the following graph to illustrate the effect of rapid inflation on the foreign exchange market. Supply of U.S. Dollars Demand for U.S. Dollars Supply of U.S. Dollars VALUE OF U.S. DOLLAR Demand for US Dollars QUANTITY OF U.S. DOLLARS