Interest rates in the United States rise relative to interest rates in other countries. As a result, in the foreign exchange market

Question

Quizplus · Accepted Answer

When interest rates in the United States rise relative to other countries, foreign investors are more attracted to U.S. assets, increasing the demand for dollars. Consequently, the supply of dollars in the foreign exchange market decreases as fewer dollars are exchanged for foreign currencies, shifting the supply curve of dollars leftward.

Interest Rates in the United States Rise Relative to Interest