Due to a recession in the US,the average rate of return on investments is likely to fall causing the US dollar to
A)Appreciate
B)Depreciate
C)Not change in value
D)None of the above

Question

​Due to a recession in the US,the average rate of return on investments is likely to fall causing the US dollar to
A)​Appreciate
B)Depreciate
C)Not change in value
D)​None of the above

Quizplus · Accepted Answer

A recession in the US usually leads to a decrease in interest rates by the Federal Reserve to stimulate the economy. Lower interest rates mean that the average rate of return on investments is likely to fall, which makes the US dollar less attractive to foreign investors. As a result, the demand for the US dollar decreases, and its value falls, leading to depreciation.

​Due to a Recession in the US,the Average Rate of Return

Due to a Recession in the US,the Average Rate of Return