Figure 15-1
-Refer to Figure 15-1. Suppose interest rates in the U.S. rise relative to interest rates in
Foreign countries. This event will

Question

Figure 15-1 
-Refer to Figure 15-1. Suppose interest rates in the U.S. rise relative to interest rates in
Foreign countries. This event will

Quizplus · Accepted Answer

When interest rates in the U.S. rise relative to interest rates in foreign countries, it becomes more attractive for investors to hold U.S. dollars and invest in U.S. assets. This increase in demand for dollars will lead to an appreciation of the dollar and a higher exchange rate.

Figure 15-1 -Refer to Figure 15-1. Suppose Interest Rates in the U.S