A sudden expectation of future depreciation of the dollar causes funds to flow __________ the United States and the dollar to actually __________.
A) out of; depreciate
B) out of; appreciate
C) into; depreciate
D) into; appreciate

Question

Quizplus · Accepted Answer

When there is an expectation of future depreciation of the dollar, investors and financial markets react by moving funds out of dollar-denominated assets to avoid losses from the currency's depreciation. This outflow of funds leads to an actual depreciation of the dollar, as demand for the dollar decreases relative to other currencies.

A Sudden Expectation of Future Depreciation of the Dollar Causes