Other things constant,which of the following would be most likely to cause the dollar to depreciate on the exchange rate market?

Question

Quizplus · Accepted Answer

When interest rates are higher abroad, investors will be more likely to invest in foreign countries, which decreases the demand for dollars and causes its depreciation. Higher domestic interest rates (choice A) and restrictive domestic monetary policy (choice C) would typically cause an increase in the value of the dollar because they make it more attractive to investors. Higher inflation abroad (choice D) may also decrease demand for the dollar, but it is less certain and less direct than the impact of higher interest rates abroad.

Other Things Constant,which of the Following Would Be Most Likely