Question

If the real interest rates increase in the united states but do not change in europe. what impact does it bring to two countries?

Answer 1

Answer:

Explanation:

A country with higher interest rates often has an increase in the value of that country's currency relative to nations offering lower interest rates.

If there is an interest rate increase in the United States but the interest rate do not change in Europe then the United States currency will increase in value relative to the currency in Europe.

Other Factors that affects the value of a country's currency aside increased interest are:

(1) Political stability

(2) Economic stability.

(3) The demand for a country's goods and services.

(4) country's balance of trade between imports and exports.