When the Australian interest rate differential ________, the demand for dollars ________ and the demand curve for dollars shifts rightward.

Question

Quizplus · Accepted Answer

When the Australian interest rate differential rises, it means that investing in Australia becomes more attractive relative to other countries, increasing the demand for Australian dollars as investors exchange their currency for dollars to invest in Australia, thus shifting the demand curve for dollars rightward.

When the Australian Interest Rate Differential ________, the Demand for Dollars