If there is a strong demand to borrow a currency, and a low supply of savings in that currency, the interest rate will be relatively low.

Question

Quizplus · Accepted Answer

If there is a strong demand to borrow a currency and a low supply of savings in that currency, this will likely cause the interest rate to increase, not decrease as suggested by option A. The low supply of savings in the currency means that there is not enough money available to lend, which can drive up interest rates as lenders attempt to attract borrowers. Additionally, the strong demand to borrow the currency indicates that there are many borrowers competing for these limited funds, further driving up interest rates.

If There Is a Strong Demand to Borrow a Currency