If interest rates in Japan rise and those in the United States do not change, there is
A) a decrease in the supply of dollars.
B) an increase in the supply of dollars.
C) a downward movement along the supply curve for dollars.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

When interest rates in Japan rise and those in the United States remain unchanged, investors are likely to find Japanese assets more attractive. This leads to an increase in the demand for Japanese yen and a corresponding increase in the supply of dollars as investors sell dollars to buy yen.

If Interest Rates in Japan Rise and Those in the United