If the United Kingdom has lower interest rates relative to the United States, the supply of the U.S. dollar will _____, leading to a _____ shift in the supply of the U.S. dollar.

Question

Quizplus · Accepted Answer

When interest rates are lower in the United Kingdom compared to the United States, investors in the UK may choose to invest their funds in the US, leading to an increase in demand for US dollars. This increase in demand for the US dollar will cause its value to appreciate, making it more expensive to purchase. As a result, the supply of US dollars will fall, leading to a leftward shift in the supply of US dollars.

If the United Kingdom Has Lower Interest Rates Relative to the United