Higher 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

Higher U.S. interest rates attract foreign capital seeking higher returns, increasing demand for the dollar, which appreciates its value. This makes U.S. goods more expensive abroad.

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