Holding Everything Else Unchanged, Higher Interest Rates in Foreign Countries

Multiple Choice

Holding everything else unchanged, higher interest rates in foreign countries relative to U.S. interest rates

A) increase the demand and reduce the supply of dollars leading to an increase in the exchange rate.
B) decrease the demand and the supply of dollars leading to an decrease in the exchange rate.
C) increase the demand and the supply of dollars leading to an increase in the exchange rate.
D) decrease the demand and increase the supply of dollars leading to a decrease in the exchange rate.