If the interest rate in London is higher than the interest rate in New York, then the dollar _____ and the British Pound _____.

Question

Quizplus · Accepted Answer

When the interest rate in London is higher than in New York, investors are attracted to the higher returns in London, increasing demand for the British Pound, which appreciates. Conversely, the dollar depreciates as demand for it decreases in favor of the Pound.

If the Interest Rate in London Is Higher Than the Interest