All else being equal,a decrease in U.S.interest rates relative to foreign interest rates causes the demand for dollars to ________ and the dollar will ________ relative to foreign currencies.

Question

Quizplus · Accepted Answer

When U.S. interest rates decrease relative to foreign interest rates, it becomes less attractive for foreign investors to hold U.S. dollars, leading to a decrease in demand for dollars. This will cause the dollar to depreciate relative to foreign currencies, as there will be less demand for it in foreign exchange markets.

All Else Being Equal,a Decrease in U