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1) An increase in the domestic interest rate causes the demand for domestic assets to ________ and the domestic currency to ________, everything else held constant.

A) increase; appreciate

B) increase; depreciate

C) decrease; appreciate

D) decrease; depreciate

2) An increase in the domestic interest rate causes the demand for domestic assets to shift to the ________ and the domestic currency to ________, everything else held constant.

A) right; appreciate

B) right; depreciate

C) left; appreciate

D) left; depreciate

3) A decrease in the domestic interest rate causes the demand for domestic assets to ________ and the domestic currency to ________, everything else held constant.

A) increase; appreciate

B) increase; depreciate

C) decrease; appreciate

D) decrease; depreciate

4) A decrease in the domestic interest rate causes the demand for domestic assets to shift to the ________ and the domestic currency to ________, everything else held constant.

A) right; appreciate

B) right; depreciate

C) left; appreciate

D) left; depreciate

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