If Foreign Interest Rates Are High Relative to Those in the U.S

question 32

Multiple Choice

If foreign interest rates are high relative to those in the U.S.:

• A)demand for dollars will decrease as investors sell their dollars to buy foreign currency for investment.
• B)demand for dollars will increase as investors sell their currency to buy dollars for investment.
• C)demand for dollars will decrease as investors sell their currency to buy dollars for investment.
• D)demand for dollars will increase as investors sell their dollars to buy foreign currency for investment.

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Definitions:

Discharge

The release or dismissal of a person from their duties, obligations, or a liability, such as in bankruptcy or employment.

Subprime Loan

A type of loan offered to individuals with poor credit scores or limited credit history, typically at higher interest rates due to perceived increased risk.

Conventional Mortgage

A mortgage that involves no government backing by either insurance or guarantee.

Mortgagor

The party who borrows money and gives a mortgage to the lender or mortgagee as security for the loan.