In the open-economy macroeconomic model,other things the same,a decrease in the interest rate shifts
A)the demand for dollars in the market for foreign-currency exchange to the right.
B)the demand for dollars in the market for foreign-currency exchange to the left.
C)the supply of dollars in the market for foreign-currency exchange to the right.
D)the supply of dollars in the market for foreign-currency exchange to the left.

Question

Quizplus · Accepted Answer

A decrease in the interest rate makes domestic assets less attractive, leading to an increase in capital outflow. This increases the supply of dollars in the foreign exchange market as investors seek foreign investments.

In the Open-Economy Macroeconomic Model,other Things the Same,a Decrease in the Interest