In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound.

Question

Quizplus · Accepted Answer

When Americans increase their investments in securities in British financial markets, they need to convert their dollars into pounds. This increased demand for pounds will lead to an appreciation of the pound and a depreciation of the dollar.

In the Foreign Exchange Market, If Americans Significantly Increase Their