-In the figure above, an increase in the U.S. interest rate relative to that in Canada shifts the demand curve for U.S. dollars __________and shifts the supply curve of U.S. dollars __________.
A) rightward; rightward
B) leftward; leftward
C) leftward; rightward
D) rightward; leftward

Question

-In the figure above, an increase in the U.S. interest rate relative to that in Canada shifts the demand curve for U.S. dollars __________and shifts the supply curve of U.S. dollars __________.
A) rightward; rightward 
B) leftward; leftward 
C) leftward; rightward 
D) rightward; leftward

Quizplus · Accepted Answer

An increase in the U.S. interest rate makes U.S. assets more attractive, increasing demand for U.S. dollars (shifting the demand curve rightward) and decreasing the supply of U.S. dollars as fewer people want to hold foreign assets (shifting the supply curve leftward).

-In the Figure Above, an Increase in the U