Refer to Figure 10-6

Question 120
Multiple Choice

Refer to Figure 10-6. An increase in U.S. interest rates would A) decrease the demand for U.S. dollars, increase the exchange rate, and lead to a decrease in net exports. The results of such a policy are represented in Panel (b). B) decrease the demand for U.S. dollars, decrease the exchange rate, and lead to an increase in net exports. The results of such a policy are represented in Panel (a). C) increase the demand for U.S. dollars, increase the exchange rate, and lead to a decrease in net exports. The results of such a policy are represented in Panel (b). D) increase the demand for U.S. dollars, decrease the exchange rate, and lead to a decrease in net exports. The results of such a policy are represented in Panel (b).