If a country s interest rate is high relative to other countries, the country will:
A) Develop a trade deficit.
B) Attract foreign funds.
C) Experience depreciation in its home currency.
D) Discourage foreign investing.

Question

Quizplus · Accepted Answer

If a country's interest rate is high relative to other countries, it will attract foreign funds. This is because foreign investors will seek to invest in the country's financial assets in order to benefit from the higher interest rates, which can lead to an increase in demand for the country's currency and an appreciation in its value. When a country's interest rates are high relative to other countries, it becomes attractive for foreign investors to invest their funds in that country's financial markets. This is because they can earn higher returns on their investments due to the high interest rates. As a result, foreign funds flow into the country, which can boost economic growth and potentially strengthen the currency.

If a Country S Interest Rate Is High Relative to Other