Figure 18-1
-Refer to Figure 18-1.Suppose that the U.S.government deficit causes interest rates in the United States to rise relative to those in the European Union.Assuming all else remains constant,how would this be represented?
A)Supply would decrease,demand would decrease and the economy moves from B to C to D.
B)Supply would increase,demand would decrease and the economy moves from C to B to A.
C)Demand would increase and the economy moves from A to B.
D)Demand would decrease and the economy moves from B to A.

Question

Figure 18-1 
-Refer to Figure 18-1.Suppose that the U.S.government deficit causes interest rates in the United States to rise relative to those in the European Union.Assuming all else remains constant,how would this be represented?
A)Supply would decrease,demand would decrease and the economy moves from B to C to D. 
B)Supply would increase,demand would decrease and the economy moves from C to B to A. 
C)Demand would increase and the economy moves from A to B. 
D)Demand would decrease and the economy moves from B to A.

Quizplus · Accepted Answer

An increase in U.S. interest rates relative to the EU would attract more foreign capital, increasing the demand for U.S. dollars, thus moving the economy from point A to point B.

Figure 18-1 -Refer to Figure 18-1.Suppose That the U.S.government Deficit Causes Interest