An Increase in the Real Interest Rate on U

question 90

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 increase.
• B) the supply of dollars will increase.
• C) the dollar will depreciate relative to foreign currencies.
• D) there will be a movement up the existing demand for dollars curve.

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