Explain how changes in relative real interest rates affect the value of a nation’s currency.
What will be an ideal response?
Higher relative real interest rates in one country will cause an increase in demand for the currency of that country or an appreciation of that country’s currency as foreign investors seek higher rates of return. The reverse would be true of lower relative real interest rates.
Economics
You might also like to view...
Fiscal policy involves the manipulation of ________
A) U.S. interest rates B) wages and prices C) federal government spending and tax revenues D) the supply of money
Economics
Which of the following statements about economic models is TRUE?
A) A good economic model is complex. B) A good model does not rely on any assumptions. C) Every model is based on a set of assumptions. D) Economic models are designed to explain what people need.
Economics