If a country experiences an increase in interest rates relative to UK interest rates, the inflow of UK funds to purchase its securities should ____, the outflow of its funds to purchase UK securities should ____, and there is ____ pressure on its currency's equilibrium value.
A) increase; decrease; downward
B) decrease; increase; upward
C) increase; decrease; upward
D) decrease; increase; downward
E) increase; increase; upward

Question

Quizplus · Accepted Answer

Higher interest rates attract foreign investment, increasing inflow of UK funds to purchase its securities, reducing outflow to UK, and putting upward pressure on its currency.

If a Country Experiences an Increase in Interest Rates Relative