flexible or floating exchange rates (3)

what is behind foreigners’ demand for dollars-which is the supply curve of the pound-foreign-exchange they offer us?the exactly similar items in their balance of payments : desire to important our export goods, need to pay us dividends, etc.
At the dd and SS intersection, the floating foreign exchange rate will get set, Having then no tendency to rise or fall from this equilibrium level.
what will happen if tomorrow we send more troops abroad , travel abroad more,find new bargains in their catalogues and expand our dollar demand for their goods,and are forced by domestic inflation to raise our export-goods prices ? Such changes will obviously sift our upward and rightward and also their leftward and upward . with what resulting intersection? With a new,higher equilibrium level of the exchange rate; as described above , just enough higher to coax out more American exports and choke off imports from Europe . The exchange rate at which we buy foreign currencies has risen ; the dollar is relative value has fallen.