In the case of an excess supply of dollars which of the foll

Solution

If there is excess supply of dollars, the value of the dollars shall come down as compared to some foreign currency. So now dollar is a cheaper currency, thus foreigners would buy more in dollars, thus the US exports would rise. The value of dollar depreciates, US exports would rise, as US goods and services has become cheaper for the rest of the world, on the other hand, the foreign currecy get appreciation, its value increases thus it is now more expensive to import same set of goods and services which people demanded earlier. Thus US imports will surely fall. Exports rise, and imports fall, that implie current account would improve.

Thus the even that \"US current account worsens\" would not happen in case of the excess supply of dollars.