When Americans and foreigners expect the return on ________ deposits to be high relative to the return on ________ deposits,there is a higher demand for dollar deposits and a correspondingly lower demand for foreign deposits.

Question

Quizplus · Accepted Answer

When Americans and foreigners expect the return on dollar deposits to be high relative to the return on foreign deposits, there is a higher demand for dollar deposits (as they offer higher returns) and a correspondingly lower demand for foreign deposits. Hence, the best choice is B, which indicates that the higher demand is for dollar deposits and lower demand is for foreign deposits.

When Americans and Foreigners Expect the Return on ________ Deposits