________ increases the supply of dollars in the foreign exchange market.

Question

Quizplus · Accepted Answer

When the interest rate in the U.S. falls relative to other countries, investors will look for higher interest rates elsewhere, which leads to selling dollar-denominated assets and buying assets denominated in foreign currencies, thereby increasing the supply of dollars in the foreign exchange market. This can lead to a depreciation in the value of the dollar relative to other currencies.

________ Increases the Supply of Dollars in the Foreign Exchange