Ceteris paribus,a rise in interest rates in the United States will cause the yen price of the dollar in international exchange markets to ________; i.e.,the dollar ________ in value against the yen.
A)increase; appreciates
B)increase; depreciates
C)decrease; depreciates
D)decrease; appreciates

Question

Quizplus · Accepted Answer

A rise in interest rates in the United States makes U.S. financial assets more attractive, leading to an increase in demand for dollars as investors buy these assets. This increased demand for dollars relative to yen causes the dollar to appreciate in value against the yen.

Ceteris Paribus,a Rise in Interest Rates in the United States