AP Macro: If real interest rates in the US fall relative to real interest rates in the UK, which of the following would occur:?
A. Uk investors buy more us securities
B. Uk exports to the US increase
C. Supply of dollars increase
D. Us investors demand for Uk pound decrease
E. Uk pound will appreciate relative to the dollar
- OiyLv 51 month agoFavorite Answer
E is the most possible answer.
- 1 month ago
I don't know the answer if this is for an exam or coursework.
But interest rates are internal to a country's economy. And one of the uses of interest rates are to stabilise the growth / depression of an economy.
If interest rates fell it would be because the economy needed stimulating and as a countermeasure to recession.
In real world terms... None of the answers are right without more info.
You would need to read the educational syllabus linked to this test to know what it's asking for.
In the real world ALL of these would happen because of the perception of money.
In the classroom you're only dealing with the mechanics of the economy not PEOPLE.