If interest rates in Sweden go up relative to the rest of the world, the
A) demand for Swedish currency will fall.
B) demand for Swedish currency will rise.
C) supply of Swedish currency will fall.
D) supply of Swedish currency will rise.

Question

Quizplus · Accepted Answer

When interest rates in Sweden increase relative to the rest of the world, it becomes more attractive to hold investments in Swedish currency because these investments now offer higher returns. As a result, investors will demand more Swedish currency to take advantage of these higher interest rates, leading to an increase in the demand for the Swedish currency.

If Interest Rates in Sweden Go Up Relative to the Rest