In the foreign exchange market, the demand for dollars increases and the demand curve shifts if the

Question

Quizplus · Accepted Answer

When the Australian interest rate differential increases, it means that Australian interest rates are higher relative to other countries, making investments in Australia more attractive. This leads to an increased demand for Australian dollars to invest in Australia, thereby reducing the demand for other currencies like the US dollar in the foreign exchange market.

In the Foreign Exchange Market, the Demand for Dollars Increases