When the Federal Reserve pursues policies that increase interest rates, the amount of foreign funds flowing into the United States also increases.

Question

Quizplus · Accepted Answer

International bankers and investors tend to invest where they can get the best return at a reasonable risk. When the Fed drives up interest rates, foreign investors are attracted by the higher return and move more of their money into the United States.

When the Federal Reserve Pursues Policies That Increase Interest Rates