Question

If a country attracts foreign investors by raising its interest rates, what is likely to happen?
A.
The country's exports are likely to increase.
B.
The country is likely to create a tariff.
C.
The inflation rate in the country is likely to increase.
D.
The value of the currency is likely to increase.


Please select the best answer from the choices provided

A
B
C
D

Answer 1

D

Higher interest rates attract foreign capital, increasing demand for the currency and causing it to appreciate (its value rises).