If the interest rate in the United States increases,then in the foreign exchange market the

Question

Quizplus · Accepted Answer

When the interest rates in the United States increase, investing in the United States becomes more attractive for foreign investors seeking higher returns on their investments. This increased demand for U.S. investments will lead to an increase in the demand for U.S. dollars, causing the exchange rate of the dollar to appreciate. Therefore, the correct answer is B, which states that the demand for U.S. dollars will increase.

If the Interest Rate in the United States Increases,then in the Foreign