Other things remaining the same, if the U.S. interest rate differential increases, the demand curve
For U.S. dollars shifts and the supply curve of U.S. dollars shifts .

Question

Quizplus · Accepted Answer

With an increase in the U.S. interest rate differential, there will be a higher demand for U.S. dollars as investors seek to take advantage of the higher interest rate. This will cause the demand curve for U.S. dollars to shift rightward. At the same time, the supply of U.S. dollars will decrease as investors hold onto their dollars to take advantage of the higher interest rate, causing the supply curve to shift leftward. Therefore, the correct choice is C, as there will be a rightward shift in the demand curve and a leftward shift in the supply curve.

Other Things Remaining the Same, If the U