If the interest rate in Japan increases while the interest rate in the United States remains constant, then
A) the demand curve for dollars shifts to the left.
B) the demand curve for dollars shifts to the right.
C) the demand curve for yen shifts to the left.
D) the demand curves for both yen and dollars remain constant.

Question

Quizplus · Accepted Answer

An increase in interest rate in Japan would make Japanese assets more attractive to investors, leading to an increase in demand for yen and a decrease in demand for dollars, shifting the demand curve for dollars to the left.

If the Interest Rate in Japan Increases While the Interest