Other things remaining the same, the U.S. interest rate differential increases if the U.S. interest rate
A) rises and foreign interest rates remain constant.
B) falls and foreign interest rates remain constant.
C) falls and foreign interest rates rise.
D) remains constant and foreign interest rates rise.

Question

Quizplus · Accepted Answer

The U.S. interest rate differential is the difference between the U.S. interest rate and the foreign interest rate. If the U.S. interest rate rises and foreign interest rates remain constant, then the U.S. interest rate differential will increase.

Other Things Remaining the Same, the U