High interest rates in the United States relative to foreign interest rates have a tendency to attract foreign investors to the U.S. money markets.

Question

Quizplus · Accepted Answer

When interest rates in the United States are higher than those in other countries, foreign investors tend to invest their money in the U.S. money markets in order to earn higher returns. This can lead to an increase in demand for U.S. dollars, which can lead to an appreciation of the currency.

High Interest Rates in the United States Relative to Foreign