Other things being equal, foreign governments and corporations would demand ____ U.S. funds if their local interest rates were s

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Other things being equal, foreign governments and corporations would demand ____ U.S. funds if their local interest rates were s

uddenly higher than U.S. rates. For a given foreign interest rate level, foreign demand for U.S. funds is ____ related to U.S. interest rates.

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1 answer:

inessss [21] · Answer 1 · 2022-02-22T17:14:01+03:00

Other things being equal,foreign governments and corporations would demand More U.S.funds if their local interest rates were suddenly higher than U.S. rates.For a given foreign interest rate level,foreign demand for U.S. funds is inversely related to U.S.interest rates.

Answer: More;inversely

Explanation:

U.S. funds represent the funds that are available for borrowing and interest rates means cost of those borrowings.Other countries can buy U.S funds.There is inverse relationship between U.S. interest rates and foreign demand for U.S. funds.If U.S. interest rates are higher than a given foreign interest rate, than foreign governments will demand less of U.S funds because it will be costlier.But on the other hand if U.S.interest rates are less than a given foreign interest rate,than other countries will demand more of U.S. funds because it will be cheaper for them.

So demand curve for U.S funds and U.S interest rates is downward sloping.It has negative slope.