As the relative expected return on dollar assets increases,foreigners will want to hold more ________ assets and less ________ assets,everything else held constant.

Question

Quizplus · Accepted Answer

When the relative expected return on dollar assets increases, foreigners will find US dollar assets more appealing because they will earn a higher return on their investment. As a result, they will want to hold more dollar assets and less of their own country's foreign assets. Therefore, the best option is C: dollar assets will increase and foreign assets will decrease as demand shifts.

As the Relative Expected Return on Dollar Assets Increases,foreigners Will