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If the U.S. interest rate, adjusted for people's expectation of inflation, increases sharply ...

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If the U.S. interest rate, adjusted for people's expectation of inflation, increases sharply ...

If the U.S. interest rate, adjusted for people's expectation of inflation, increases sharply relative to the rest of the world, then

• there will be no change in the demand for dollars in foreign exchange markets but there will be an increase in demand for foreign currency.

• the dollar will appreciate.

• the dollar will depreciate.

• there will be a decrease in the demand for dollars in foreign exchange markets.

Textbook

Economics Today: The Micro View

Edition: 19^th

Author: Miller

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Helped a lot

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