If demand for NZD  goes up, NZD will appreciate.radio_button_uncheckedTrueradio_button_uncheckedFalseradio_button_uncheckedCannot decideSUBMIT

Understanding the Relationship Between Demand and Currency Value

1. Break Down the Problem:
   The statement suggests a direct relationship between the demand for New Zealand dollars (NZD) and its value in the foreign exchange market. To analyze the truth of this statement, we need to consider how currency appreciation works.

2. Relevant Concepts:

   • Currency Appreciation: This occurs when the value of a currency increases relative to another currency.
   • Supply and Demand: In economics, when the demand for a good or service increases, its price tends to rise, assuming supply remains constant. This principle also applies to currencies in the foreign exchange market.

3. Analysis and Detail:
   When the demand for NZD increases, it typically means that more investors, traders, or consumers want to acquire NZD for trade, investment, or spending purposes. This increased demand can lead to a higher price for NZD in terms of other currencies; hence, the NZD appreciates.

   Conversely, if demand decreases, the value of NZD would likely decline. Various factors can influence demand, including interest rates, economic conditions, and geopolitical events. Thus, the initial statement holds validity based on fundamental economic principles.

4. Verify and Summarize:
   Given the principles of supply and demand within the foreign exchange market, the assertion that "if demand for NZD goes up, NZD will appreciate" is accurate. In a competitive market, an increase in demand without a corresponding increase in supply leads to a higher price.

Final Answer

True: If demand for NZD goes up, NZD will appreciate.