On a foreign exchange market diagram with dollars on the horizontal axis and the yen price of the dollar on the vertical axis,a rise in the U.S.interest rate relative to the Japanese interest rate shifts the ________ curve of dollars to the ________.

Question

Quizplus · Accepted Answer

A rise in the U.S. interest rate relative to the Japanese interest rate makes holding dollars more attractive, increasing the demand for dollars as investors seek the higher returns available in the U.S. This is represented by a shift to the right in the demand curve for dollars on the foreign exchange market diagram.

On a Foreign Exchange Market Diagram with Dollars on the Horizontal