Question

British investors frequently invest in the u.s. or italy, depending on the prevailing interest rates. if italian interest rates suddenly rise high above u.s. rates, the investors will ____ the supply of pounds to be exchanged for dollars and thus put ____ pressure on the value of the pound against the u.s. dollar.

Answer 1

Answer:

decrease, upward

Explanation:

When Italian interest rates increase, their demand in Italy would increase, hence a downward pressure on the supply of the same would be required. as the demand of the currency in italy increases, its value also increases. hence there is an upward pressure on the value of the pound against the u.s. dollar.