If interest rates in Japan rise and those in Australia do not change, there is
A)a downward movement along the supply curve for Australian dollars.
B)a decrease in the supply of Australian dollars.
C)an increase in the supply of Australian dollars.
D)None of the above answers is correct.

Question

Quizplus · Accepted Answer

If interest rates in Japan rise while those in Australia remain unchanged, investors may seek higher returns in Japan, leading to an increase in the supply of Australian dollars as investors exchange them for Japanese yen.

If Interest Rates in Japan Rise and Those in Australia