-In the figure above, the shift in the demand curve for U.S. dollars from D₀to D₁could occur when A) the U.S. interest rate drops. B) the expected future exchange rate falls. C) foreign interest rates drop. D) people expect that the dollar will depreciate.

Question

Quizplus · Accepted Answer

When foreign interest rates drop, U.S. assets become more attractive, increasing the demand for U.S. dollars as investors seek to invest in the U.S.

-In the Figure Above, the Shift in the Demand Curve