Ceteris paribus,if interest rates in the United States rise relative to those abroad,then the surplus in the U.S.capital account would

Question

Quizplus · Accepted Answer

When interest rates in the United States rise relative to those abroad, it becomes more attractive for investors to hold assets denominated in U.S. dollars, leading to an inflow of capital into the United States. This increases the surplus in the U.S. capital account. Additionally, the increased demand for U.S. dollars to purchase these assets leads to an appreciation of the dollar.

Ceteris Paribus,if Interest Rates in the United States Rise Relative