Relatively high real interest rates in the United States tend to ?
Correct answer: D. increase the foreign demand for dollars causing the dollar to appreciate
- A. decrease the foreign demand for dollars causing the dollar to depreciate
- B. decrease the foreign demand for dollars causing the dollar to appreciate
- C. increase the foreign demand for dollars causing the dollar to depreciate
- D. increase the foreign demand for dollars causing the dollar to appreciate
Explanation
Higher real interest rates make dollar-denominated assets more attractive to foreign investors. The resulting increase in demand for dollars tends to make the dollar appreciate.
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