Suppose real interest rates in the U.S. rose. Foreign investors would try to take advantage of this and cause a(n) _____ of the dollar.

Question

Quizplus · Accepted Answer

When real interest rates in the U.S. rise, foreign investors are attracted to the higher returns available from U.S. assets. This increases demand for the dollar to purchase these assets, leading to an appreciation of the dollar.

Suppose Real Interest Rates in the U