All else being equal,an increase in the desirable characteristics of U.S.financial securities causes the demand for dollars to ________ and the dollar will ________ relative to foreign currencies.

Question

Quizplus · Accepted Answer

When the desirable characteristics of U.S. financial securities increase, the demand for dollars also increases. This is because foreign investors will want to purchase these securities which are denominated in dollars. As the demand for dollars increases, the value of the dollar also increases, which leads to an appreciation relative to foreign currencies.

All Else Being Equal,an Increase in the Desirable Characteristics of U.S.financial