If the interest rate in the United States rises

Question

Quizplus · Accepted Answer

When interest rates in the U.S. rise, investors are attracted to the higher returns they can earn on U.S. investments. This leads to an increase in demand for dollars as investors need to exchange their local currency for dollars to purchase these investments. An increase in demand for dollars leads to an appreciation of the U.S. exchange rate, as there are more buyers of dollars in the foreign exchange market.

If the Interest Rate in the United States Rises