Investment Spending and Foreign Exchange Market

Question

If investment spending increases substantially due to technological advancements, thereby boosting GDP, what effect is most likely to be observed in the foreign exchange market?

Accepted Answer

Increased investment raises GDP, attracting foreign capital and shifting the demand curve for domestic currency to the right.

Answer

Higher investment spending results in increased exports, shifting the supply curve for domestic currency to the right.

Answer

An increase in investment depresses domestic savings and shifts the demand curve to the left.

Answer

Investment spending has no correlation with GDP or the forex market.