If interest rates in the U.S. are higher than elsewhere, it will cause
A) the demand for dollars to decrease
B) the supply of dollars to increase
C) the exchange value of the dollar in relation to other currencies to fall
D) the dollar to depreciate
E) the demand for dollars to increase

Question

Quizplus · Accepted Answer

Higher interest rates in the U.S. attract foreign capital seeking higher returns, increasing the demand for dollars as investors exchange their own currency for dollars to invest in the U.S. This increased demand strengthens the dollar's value relative to other currencies.

If Interest Rates in the U