In October 2008, Icelandʹs central bank increased its lending rate to 18% in an ʺeffort to prop up the countryʹs frozen current and markets ʺ www.nytimes.com, October, 29, 2008)
As a result, the __________ curve for Icelandic krona shifted _________, holding all else the same.

Question

In October 2008, Icelandʹs central bank increased its lending rate to 18% in an ʺeffort to prop up the countryʹs frozen current and markets ʺ www.nytimes.com, October, 29, 2008)
As a result, the __________	curve for Icelandic krona shifted _________, holding all else the same.

Quizplus · Accepted Answer

An increase in the lending rate would make Icelandic assets more attractive, increasing the demand for Icelandic krona, thus shifting the demand curve rightward.

In October 2008, Icelandʹs Central Bank Increased Its Lending Rate