FAQs
There is a positive relationship between the rate of foreign exchange and demand for foreign exchange. This means the higher the rate of foreign exchange, the higher will be the supply of foreign exchange and vice-versa. Thus supply curve slopes upwards.
When the supply curve is a vertical straight line parallel to the y axis? ›
In the case of Perfectly Inelastic Supply, the supply curve is a vertical straight line parallel to the Y-axis. This indicates that the quantity supplied remains constant regardless of price changes. No matter how much the price increases or decreases, the quantity supplied does not change.
In what case the demand curve is a vertical straight line and parallel to the Y axis? ›
A vertical straight line demand curve parallel to Y-axis shows no change in the demand irrespective of change in price. So that, Ed = 0. Q. When the slope of demand curve = infinity, the price elasticity of demand = 0.
What does supply curve vertical straight line indicates? ›
If there is no change in the quantity supplied with changes in the price of the product, then the supply of that commodity becomes completely inelastic i.e., the elasticity of supply is zero and the supply curve will be a vertical line.
What is the curve of the foreign currency exchange? ›
An FX forward curve is a curve that shows FX forward pricing for all the different dates in the future. FX forward pricing is determined by the current exchange rate, the interest rate differentials between the two currencies, and the length of the FX forward.
Which curve is the supply curve? ›
In most cases, the supply curve is drawn as a slope rising upward from left to right, since product price and quantity supplied are directly related (i.e., as the price of a commodity increases in the market, the amount supplied increases).
Is a vertical line always parallel to the Y-axis? ›
A vertical line is a line, parallel to y-axis and goes straight, up and down, in a coordinate plane. Whereas the horizontal line is parallel to x-axis and goes straight, left and right.
When drawing a supply curve, we always place _______ and __________.? ›
Question: When drawing a supply curve, we always place price on the vertical axis and quantity on the horizan axis.
When you draw an individual supply curve, _____ goes on the vertical axis and _____ is on the horizontal axis.? ›
The supply curve is shown in a graph with the price on the left vertical axis and the quantity supplied on the horizontal axis.
Which demand curve is parallel to Y-axis? ›
When the demand curve is parallel to the vertical axis, it means, that the same amount of goods are demanded at any price level. Which further means that there is no effect of change in price on the quantity demanded. Hence, the product is perfectly Inelastic and quantitatively, elasticity of demand is 0.
Perfectly elastic demand curve is horizontal straight line. This is because at the given price the quantity demanded is infinite, even if there is a slight change in the price the demand becomes infinity and hence the curve is flat. A perfectly elastic price-demand curve is parallel to the X - axis.
What is a vertical straight line demand curve? ›
Answer and Explanation:
A demand curve that is drawn as a vertical line has a price elasticity of demand equal to Zero. If the demand curve is vertical, then it is perfectly inelastic. The perfectly inelastic demand is equal to zero.
What does a vertical supply curve parallel to the Y axis represent? ›
A vertical supply curve parallel to Y axis implies that the elasticity of supply is zero.
What goes on the vertical axis in a supply curve? ›
The horizontal axis on the supply and demand diagram represents quantity. The vertical axis represents price. The supply curve is plotted as a line with an upward slope, pointing up and to the right.
Is any supply curve a straight line? ›
In case of zero elastic supply,supply curve is a horiozontal striangle line.
Why is the supply curve in the foreign currency exchange market vertical? ›
Therefore, the supply curve in the foreign currency market is vertical because of its dependence on real interest rate and not real exchange rate, hence creating an inverse correlation with the net capital outflow.
What is the demand curve for foreign exchange? ›
Demand curve is downward sloping (due to the inverse relationship between exchange rate and the demand for foreign exchange).
Is the US currency supply curve upward sloping? ›
Explanation: The supply curve of the US dollar is represented as an upward sloping curve because it shows the positive relationship between the supply of dollar in foreign exchange market to the total US imports, such that higher imports implies more supply of US dollar, and vice-versa.
Why does supply of foreign exchange rise when its price rises? ›
The supply of foreign currency rises in the following situations: 1. When price of a foreign currency rises domestic goods become relatively cheaper. It induces the foreign country to increase their imports from the domestic country. As a result supply of foreign currency rises.