A Decrease in the United States Interest Rate Relative to the Japanese

Question 56
Multiple Choice

A decrease in the United States interest rate relative to the Japanese interest rate will cause the exchange rate, measured in yen per dollar, to ____ as international investors ____ their demand for dollar-denominated assets. A) rise; increase B) fall; increase C) rise; decrease D) None of these are correct because only the government can change the exchange rate. E) fall; decrease