Lower U.S. interest rates cause the value of the dollar to
A) rise, making U.S. goods relatively cheaper on world markets.
B) rise, making U.S. goods relatively more expensive on world markets.
C) fall, making U.S. goods relatively cheaper on world markets.
D) fall, making U.S. goods relatively more expensive on world markets.

Question

Quizplus · Accepted Answer

When the interest rates in the U.S. are lowered, investors may choose to invest in other countries with higher interest rates, leading to a decrease in demand for the dollar. As a result, the value of the dollar falls, making U.S. goods relatively cheaper on world markets.

Lower US Interest Rates Cause the Value of the Dollar to to