Answer:
(b) U.S. residents want to buy more foreign bonds. The real exchange rate falls.
Explanation:
A fall in the exchange rate is known as a depreciation in the exchange rate, means the currency is worth less compared to other countries. For example, a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. As a results, residents will want to buy more foreign goods other than the country own produced goods. This will results in a shift in a demand or supply curve which occurs when a good's quantity demanded or supplied changes even though price remains the same.
