A country's currency appreciates relative to other currencies when
A) its inflation rate exceeds that of other countries.
B) its rate of economic growth exceeds that of other countries.
C) its interest rate levels rise more rapidly than elsewhere.
D) it increases the price of gold.
E) gold flows into the country from abroad.

Question

Quizplus · Accepted Answer

When a country's interest rates rise more rapidly than those of other countries, it attracts foreign capital, increasing demand for its currency and causing it to appreciate.

A Country's Currency Appreciates Relative to Other Currencies When