For many years, the only currency that oil-producing countries would accept for their oil was the United States dollar. What would happen to the value of the dollar if the demand for oil were to increase?
Nothing, since the demand for oil cannot increase.
The value of the dollar would increase.
The value of the dollar would not change.
The value of the dollar would go down.**
I think you are wrong. If there is more demand for dollars (due to increased demand for oil, paid for in dollars), the value of the dollar will increase.
http://www.investopedia.com/ask/answers/forex/how-forex-exchange-rates-set.asp
I agree, Reed.
SUE AND REED HELP
To determine what would happen to the value of the dollar if the demand for oil were to increase, we need to understand the relationship between the demand for oil and the value of the dollar. In this case, it is important to consider the fact that for many years, oil-producing countries only accepted the United States dollar as payment for their oil. This arrangement is commonly referred to as the petrodollar system.
When the demand for oil increases, it typically leads to an increase in the price of oil. This increase in the oil price will result in oil-importing countries needing to buy more dollars to pay for the higher-priced oil. As a result, the demand for the dollar increases, which creates upward pressure on its value in the foreign exchange markets.
Therefore, if the demand for oil were to increase, it is likely that the value of the dollar would also increase. This is because the increased demand for oil would drive up the demand for dollars, strengthening its value relative to other currencies.
Given this information, the correct answer to the question is that the value of the dollar would increase.