The demand for dollars will increase in foreign-exchange markets if:
A) U.S. interest rates are high relative to those overseas.
B) the United States is perceived to be a riskier place for investment relative to other nations.
C) foreigners want to buy less U.S. goods.
D) U.S. consumers decide to buy more foreign goods than before.

Question

Quizplus · Accepted Answer

When U.S. interest rates are high relative to those overseas, foreign investors will want to invest in U.S. assets, which requires them to purchase dollars, increasing the demand for dollars in foreign-exchange markets.

The Demand for Dollars Will Increase in Foreign-Exchange Markets If