Which of the following would lead to a depreciating dollar?
A)a higher federal deficit
B)lower interest rates
C)higher interest rates
D)contractionary monetary policy

Question

Which of the following would lead to a depreciating dollar?
A)a higher federal deficit 
B)lower interest rates 
C)higher interest rates 
D)contractionary monetary policy

Quizplus · Accepted Answer

Lower interest rates decrease the demand for the dollar as investors seek higher returns elsewhere, leading to a depreciation of the dollar. A higher federal deficit, higher interest rates, and contractionary monetary policy can all lead to an appreciation of the dollar.

Which of the Following Would Lead to a Depreciating Dollar