If real interest rates decline in the United States relative to real interest rates abroad,the dollar's exchange value will appreciate under a floating exchange-rate system.

Question

Quizplus · Accepted Answer

If real interest rates decline in the United States relative to real interest rates abroad, it means that the return on investing in the US is lower compared to other countries. This would lead to a decrease in demand for US dollars, causing its exchange value to depreciate.

If Real Interest Rates Decline in the United States Relative