Other things the same,an increase in the U.S.interest rate causes
A)demand in the market for foreign-currency exchange to increase so the exchange rate increases.
B)demand in the market for foreign-currency exchange to decrease so the exchange rate decreases.
C)supply in the market for foreign-currency exchange to increase so the exchange rate decreases.
D)supply in the market for foreign-currency exchange to decrease so the exchange rate increases.

Question

Quizplus · Accepted Answer

An increase in the U.S. interest rate makes U.S. assets more attractive, leading to an inflow of foreign capital. This decreases the supply of foreign currency in the exchange market, causing the exchange rate to increase.

Other Things the Same,an Increase in the U