Asked by Fitri Hj Ahmad on Jul 03, 2024
Verified
Higher domestic interest rates encourage
A) U.S.investors to invest abroad.
B) foreign investors to withdraw their funds from U.S.investment.
C) U.S.investors to withdraw their funds from foreign investment.
Domestic Interest Rates
The rate of interest charged by banks on loans and offered on deposits within a country's borders.
U.S. Investors
U.S. investors refer to individuals or entities within the United States that allocate capital with the expectation of receiving financial returns, engaging in activities like stock market investment, bonds, real estate, and more.
Foreign Investment
Investment by individuals, companies, or governments in assets or businesses located in another country.
- Analyze the impact of interest rates on foreign investment and currency valuation.
Verified Answer
DF
Dzifa Felicia SakiteyJul 09, 2024
Final Answer :
C
Explanation :
Higher domestic interest rates make domestic investments more attractive compared to foreign investments, encouraging U.S. investors to bring their funds back to the U.S. from abroad to take advantage of the higher returns.
Learning Objectives
- Analyze the impact of interest rates on foreign investment and currency valuation.