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AP® Macroeconomics

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How Do Lower Interest Rates Affect Foreign Exchange?

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If lower interest interest rates cause foreign demand for the Argentinian peso to decrease, which of the following will happen to the international value of the peso, Argentinian exports, and aggregate demand in Argentina?

A

Peso value increases; exports increase; aggregate demand increases.

B

Peso value increases; exports decrease; aggregate demand decreases.

C

Peso value decreases; exports decrease; aggregate demand decreases.

D

Peso value decreases; exports increase; aggregate demand increases.

E

Peso value decreases; exports increase; aggregate demand decrease.