Everything else remaining unchanged, an increase in interest rates in the United States is most likely to result in:
A)depreciation of the dollar.
B)outflows of capital from the United States.
C)capital inflows into the United States.
D)a decrease in the demand for dollar-denominated financial assets.

Question

Quizplus · Accepted Answer

An increase in interest rates in the United States makes dollar-denominated financial assets more attractive to investors, leading to capital inflows as investors seek higher returns.

Everything Else Remaining Unchanged, an Increase in Interest Rates in the United