Suppose interest rates in foreign countries increase relative to the U.S.interest rate.As a result, there is ________ the demand curve for dollars.

Question

Quizplus · Accepted Answer

If interest rates in foreign countries increase relative to the U.S. interest rate, then investors will move their money to those countries in order to earn higher returns. This decreases the demand for dollars, as investors sell dollars to buy foreign currency. Therefore, the demand curve for dollars shifts leftward.

Suppose Interest Rates in Foreign Countries Increase Relative to the U.S.interest