An Increase in the Real Interest Rate on U

question 57

Multiple Choice

An increase in the real interest rate on U.S. bonds, everything else equal, will have the following impact on the foreign exchange market:

• A) the demand for dollars will decrease.
• B) the supply of dollars will increase.
• C) the dollar will depreciate relative to foreign currencies.
• D) the demand for dollars will increase.

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Definitions:

Levator Scapulae

A muscle located in the neck and back that elevates the scapula (shoulder blade).

Serratus Anterior

A muscle on the side of the chest that helps rotate the arm and move it away from the body.

Pectoralis Minor

A thin, triangular muscle located beneath the Pectoralis Major in the chest, involved in functions like scapula downward rotation, depression, and anterior tilt.

Rhomboideus Major

A muscle in the back that is involved in moving the shoulder blades and supporting the arm.