When Americans or foreigners expect the return on dollar assets to be high relative to the return on foreign assets,there is a ________ demand for dollar assets and a correspondingly ________ demand for foreign assets.

Question

Quizplus · Accepted Answer

When there is an expectation of a higher return on dollar assets compared to foreign assets, there will be a higher demand for dollar assets as investors seek to capitalize on the higher return. As a result, the demand for foreign assets will decrease because investors are choosing to invest in dollar assets instead.

When Americans or Foreigners Expect the Return on Dollar Assets