When the interest rate falls, American bonds become _____ attractive to foreign investors, often leading to a(n) _____ in the value of the U.S. dollar in foreign exchange markets.

Question

Quizplus · Accepted Answer

When interest rates fall, American bonds offer lower returns, making them less attractive to foreign investors. This often leads to a decrease in demand for the U.S. dollar, causing its value to decrease in foreign exchange markets.

When the Interest Rate Falls, American Bonds Become _____ Attractive