An increase in the expected inflation rate in the United States will

Question

Quizplus · Accepted Answer

An increase in the expected inflation rate in the United States would decrease the purchasing power of the dollar and make U.S. goods relatively more expensive compared to foreign goods. This would cause the U.S. exchange rate to depreciate, as foreign investors would demand a higher return on their investment to compensate for the decrease in the value of the dollar.

An Increase in the Expected Inflation Rate in the United