An increase in the Japanese interest rate will ________ the supply of dollars and lead the dollar to ________.
A) increase; appreciate
B) increase; depreciate
C) decrease; appreciate
D) decrease; depreciate

Question

Quizplus · Accepted Answer

An increase in the Japanese interest rate makes Japanese assets more attractive, leading investors to convert dollars to yen, increasing the supply of dollars and causing the dollar to depreciate.

An Increase in the Japanese Interest Rate Will ________ the Supply