If the interest rate rises in Australia relative to other nations,then in the foreign exchange market the demand for dollars ________ and the supply of dollars ________.

Question

Quizplus · Accepted Answer

When interest rates rise in Australia relative to other nations, foreign investors are more likely to invest in Australia to take advantage of higher returns, increasing the demand for Australian dollars. Simultaneously, Australians are less likely to invest abroad, decreasing the supply of Australian dollars in the foreign exchange market.

If the Interest Rate Rises in Australia Relative to Other