Higher real interest rates in the United States (relative to foreign real interest rates)will lead to a(n)_____________________ of the dollar,a ____________ shift of the U.S.AD curve and a _________________ shift of the U.S.SRAS curve.

Question

Quizplus · Accepted Answer

Higher real interest rates in the U.S. attract foreign capital, leading to an appreciation of the dollar. This makes U.S. exports more expensive and imports cheaper, reducing net exports and shifting the AD curve leftward. The SRAS curve shifts rightward due to lower import costs.

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