Which example of market expectations causes the dollar to appreciate against the yen? Expectations that the U.S.economy will have
A) faster economic growth than Japan.
B) higher future interest rates than Japan.
C) more rapid money supply growth than Japan.
D) higher inflation rates than Japan.

Question

Quizplus · Accepted Answer

When market expectations reflect higher future interest rates in the U.S. compared to Japan, investors will have a greater demand for U.S. dollars, causing the dollar to appreciate against the yen. This is because higher interest rates make the U.S. a more attractive destination for investment, leading to an increase in demand for U.S. dollars.

Which Example of Market Expectations Causes the Dollar to Appreciate