________ in the foreign interest rate causes the demand for domestic assets to shift to the left and the domestic currency to ________,everything else held constant.

Question

Quizplus · Accepted Answer

CWhen the foreign interest rate increases, investors are more attracted to foreign assets, decreasing the demand for domestic assets and causing the domestic currency to depreciate. Conversely, a decrease in the foreign interest rate makes domestic assets more attractive, increasing their demand and causing the domestic currency to appreciate.

________ in the Foreign Interest Rate Causes the Demand for Domestic