The interest rate in Canada rises while the interest rate in the United States does not change. The
A) demand curve for U.S. dollars will shift rightward.
B) demand curves Canadian and U.S. dollars will remain unchanged.
C) demand curve for Canadian dollars will shift leftward.
D) demand curve for Canadian dollars will shift rightward.

Question

Quizplus · Accepted Answer

The higher interest rate in Canada will make Canadian dollar-denominated assets more attractive to foreign investors, increasing the demand for Canadian dollars.

The Interest Rate in Canada Rises While the Interest Rate