An increase in real GDP in USA will lead to all of the following except one, which is:

Question

Quizplus · Accepted Answer

An increase in real GDP in the USA typically leads to higher interest rates as the Federal Reserve may raise rates to control inflation, which can cause the US dollar to appreciate due to higher returns on investments denominated in USD. This appreciation can lead to a relative depreciation of other currencies, like the Canadian dollar, against the USD. However, higher US interest rates might make Canadian bonds less attractive to investors, as they might prefer the higher returns available from US bonds, contradicting option D.

An Increase in Real GDP in USA Will Lead to All