Question

1.7 As a result of more South Africans visiting the United States, we can expect, ceteris paribus:
a) an appreciation of the rand relative to the dollar.
b) a depreciation of the dollar relative to the rand.
c) an appreciation of the dollar relative to the rand.
d) a depreciation of the rand relative to all major currencies.
e) an appreciation of the dollar relative to all major currencies.

Answer 1

Since Rand is the currency of the South Africa and dollar is the currency of United States of America.

So when more people of South Africa are visiting the United States of America, so demand for dollar will increase relative to the demand for Rand. So dollar will appreciate and Rand will depreciate.

Hence dollar will appreciate relative to the rand.

Hence option C is the correct answer.

Option C: an appreciation of dollars relative to the rand.