When an economy sees higher real, risk-adjusted interest rates, it will most likely experience a(n)__________ in demand for its currency in the foreign exchange market, and the value of its currency will __________.

Question

When an economy sees higher real, risk-adjusted interest rates, it will most likely experience a(n)__________ in demand for its currency in the foreign exchange market, and the value of its currency will __________.

Quizplus · Accepted Answer

Higher real, risk-adjusted interest rates make a currency more attractive to investors, increasing demand for the currency in the foreign exchange market, which typically leads to an appreciation of the currency's value.

When an Economy Sees Higher Real, Risk-Adjusted Interest Rates, It