Question

Between 2012 and​ 2015, the U.S. exchange rate​ ______ against the Japanese yen because the U.S. interest rate differential was expected to​ _______.

A. ​fell; decrease
B. ​fell; increase
C. ​rose; increase
D. ​rose; decrease

Answer 1

The correct answer is (C)

Step-by-step explanation:

Between 2012 and 2015, economists predicted that the interest differential of the US will increase. The positive news in the US exchange rate market helped the currency to appreciate rapidly against the Japanese yen. Interest differential is the difference between the exchange rate of two countries. So, between 2012 and 2015, the US exchange rate rose against the Japanese yen, and the main reason was the US interest rate was expected to increase.