As a result of contractionary monetary policy, higher U.S. interest rates will result in a(n) _____ in the demand for dollars and a(n) _____ in the supply of dollars.

Question

Quizplus · Accepted Answer

Contractionary monetary policy typically leads to higher interest rates, which increases the demand for dollars as investors seek higher returns. Simultaneously, it decreases the supply of dollars as higher interest rates attract foreign capital, reducing the need for Americans to supply dollars in exchange for foreign currencies.

As a Result of Contractionary Monetary Policy, Higher U