Ceteris paribus, a rise in interest rates in Canada will cause the yen price of the dollar in international exchange markets to ________; that is, the Canadian dollar ________ in value against the yen.
A)increase; appreciates
B)increase; depreciates
C)decrease; depreciates
D)decrease; appreciates

Question

Quizplus · Accepted Answer

A rise in interest rates in Canada would make Canadian dollar-denominated assets more attractive, leading to an increase in demand for Canadian dollars. This would cause the Canadian dollar to appreciate in value against the yen, making the yen price of the dollar increase.

Ceteris Paribus, a Rise in Interest Rates in Canada Will