What is a flight to safety

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Reference no: EM131342044

According to an article in the Wall Street Journal in June 2010, "Treasurys should continue to benefit from the flight-to-safety bid that caught hold this spring on concerns about debt-laden euro-zone nations and the health of euro-zone banks."

a. What is a "flight to safety"?

b. How would the flight to safety described in this article affect the exchange rate between the U.S. dollar and the euro? Illustrate your answer with a demand and supply graph showing the market for U.S. dollars in exchange for euros.

Reference no: EM131342044

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