If interest rates rise in the United States, what effect does this have on the value of the U.S. dollar?
What will be an ideal response?
If interest rates in the United States rise above interest rates in other countries, an inflow of portfolio investment into the United States will result. Although usually considered short term, this inflow in the capital account serves to increase both the demand for dollar-denominated assets and the value of the dollar vis-à-vis other currencies. This phenomenon was clearly seen during the 1980–1985 period.
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Personal saving
a. equals national income less personal consumption expenditures. b. is personal disposable income minus consumption expenditures. c. is the value of stocks and bonds. d. equals personal income minus taxes. e. is personal disposable income less personal taxes.
A depreciation of the South Korean won against the U.S. dollar will
A. Raise the dollar price of Korean goods. B. Lower the won price of Korean goods. C. Lower the dollar price of U.S. goods. D. Raise the won price of U.S. goods.