Question

If interest rates fall in the USA relative to the rest of the world the demand for US dollar will ________ because there is lesser demand for assets with ______ returnsa. decrease/lowerb. increase/diminishing marginalc. decrease/higherd. increase/lowere. increase/ higher

Answer 1

Answer:

a. decrease/lower

Explanation:

In the case when the rate of interest declines in the USA as compared with rest of the word, the demand of the dollar of the US would decrease as it represents the lesser demand for the assets with the lesser returns

Therefore as per the given situation, the option a is correct

hence, the same is to be considered

All the other options are incorrect