In international exchange markets, a rise in interest rates in Canada will cause the demand for Canadian dollars to ________ and the supply of dollars to ________.
A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease

Question

Quizplus · Accepted Answer

A rise in interest rates in Canada makes Canadian dollar-denominated assets more attractive, increasing the demand for Canadian dollars as investors seek higher returns. Conversely, Canadians are less incentivized to invest abroad, decreasing the supply of Canadian dollars on the international market.

In International Exchange Markets, a Rise in Interest Rates in Canada