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

Question

Quizplus · Accepted Answer

An increase in the foreign interest rate causes the return on foreign assets to increase, making them more attractive to investors. As a result, the demand for domestic assets decreases, shifting the demand curve to the left, and causing the domestic currency to depreciate.

________ in the Foreign Interest Rate Causes the Demand for Domestic