High real interest rates in the United States tend to:
A) Decrease the demand for dollars,causing the dollar to depreciate
B) Decrease the demand for dollars,causing the dollar to appreciate
C) Increase the demand for dollars,causing the dollar to depreciate
D) Increase the demand for dollars,causing the dollar to appreciate

Question

Quizplus · Accepted Answer

High real interest rates in the United States attract foreign capital, increasing the demand for dollars and causing the dollar to appreciate. This is because investors earn a higher return on their investment due to higher interest rates, making U.S. assets more attractive.

High Real Interest Rates in the United States Tend To