In international exchange markets,a rise in interest rates in the United States will cause the demand for 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 the United States makes U.S. assets more attractive, leading to an increase in demand for dollars by foreign investors who need dollars to buy U.S. assets. At the same time, higher interest rates make U.S. investors more likely to invest domestically rather than abroad, decreasing the supply of dollars on the international market as fewer dollars are being exchanged for foreign currencies to invest overseas.

In International Exchange Markets,a Rise in Interest Rates in the United