If the U.S.interest rate falls relative to the British interest rate,
A) the U.S.demand for pounds will not change
B) the U.S.demand for pounds will decrease
C) the U.S.demand for pounds will increase
D) there will be a rightward movement along the U.S.demand curve for pounds
E) there will be a leftward movement along the U.S.demand curve for pounds

Question

Quizplus · Accepted Answer

When U.S. interest rates fall relative to British interest rates, U.S. investors may seek higher returns in Britain, increasing the demand for pounds to invest in British assets.

If the USInterest Rate Falls Relative to the British Interest Rate