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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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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