Which of the following is most likely to happen as the result of lower real interest rates in the United States?

Question

Quizplus · Accepted Answer

Lower real interest rates typically lead to a decrease in demand for a country's currency, which in turn leads to a depreciation of the currency on the foreign exchange market. This makes exports cheaper for foreign buyers and imports more expensive for domestic buyers, which can help to increase exports and reduce imports. Therefore, the most likely outcome is that the dollar will depreciate on the foreign exchange market, and exports will grow relative to imports.

Which of the Following Is Most Likely to Happen as the Result