Lower real interest rates in the United States (relative to foreign real interest rates)will lead to a(n)________________ of the dollar and a ______________ shift of the U.S.SRAS curve.

Question

Quizplus · Accepted Answer

Lower real interest rates in the United States make the dollar less attractive to foreign investors, reducing demand for the currency, and leading to a depreciation of the dollar. A depreciation of the dollar causes an increase in input costs (e.g., imports become more expensive), leading to a leftward shift of the U.S. SRAS curve.

Lower Real Interest Rates in the United States (Relative to Foreign