Asked by Kylee Israelsen on Jun 27, 2024
Verified
An increase in the U.S. interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S. assets.
Foreign Assets
Financial assets held in a country by individuals or institutions from another country, including securities, properties, and bank accounts.
U.S. Interest Rate
The rate at which the Federal Reserve lends to banks, influencing borrowing costs and economic activity in the United States.
U.S. Assets
Assets located within the United States that might include properties, stocks, bonds, and other financial instruments.
- Understand the impact of interest rate changes on international asset transactions.
Verified Answer
AP
Amber PerkinsJun 27, 2024
Final Answer :
True
Explanation :
Higher U.S. interest rates make U.S. assets more attractive to investors (including foreigners) due to potentially higher returns, while Americans may find foreign assets less appealing compared to domestic assets offering higher interest earnings.
Learning Objectives
- Understand the impact of interest rate changes on international asset transactions.