If the U.S. interest rate differential rises, then the effect in the foreign exchange market on the demand for dollars is that the
A) demand for dollars decreases.
B) quantity of dollars demanded decreases.
C) quantity of dollars demanded increases.
D) demand for dollars increases.
E) demand for dollars does not change and the quantity of dollars demanded also does not change.
Question 2
Other things remaining the same, if the quantity of money increases by a given percentage, then in the long run the ________ by the same percentage.
A) real interest rate rises
B) price level rises
C) nominal interest rate falls
D) price level falls
E) real interest rate falls
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