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

Question

Quizplus · Accepted Answer

An increase in the U.S. interest rate makes U.S. assets more attractive, increasing the demand for U.S. dollars as investors seek higher returns.

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