Other things remaining the same, the U.S. interest rate differential increases if the U.S. interest rate
A) remains constant and foreign interest rates fall.
B) falls and foreign interest rates remain constant.
C) falls and foreign interest rates rise.
D) remains constant and foreign interest rates rise.

Question

Quizplus · Accepted Answer

The U.S. interest rate differential increases when the U.S. interest rate remains constant while foreign interest rates fall, as this makes U.S. rates relatively higher compared to foreign rates.

Other Things Remaining the Same, the U