If the interest rate on Swiss franc assets increases while interest rates in the United States remain constant, the
A) quantity of dollars demanded will decrease.
B) demand for dollars will increase.
C) demand for dollars will decrease.
D) quantity of dollars demanded will increase.

Question

Quizplus · Accepted Answer

When the interest rate on Swiss franc assets increases while interest rates in the United States remain constant, investors will find Swiss franc assets more attractive. This leads to an increased demand for Swiss francs and a decreased demand for dollars, as investors sell dollars to buy Swiss francs.

If the Interest Rate on Swiss Franc Assets Increases While