All else equal, if the inflation rate increases in the U.S. but remains unchanged in Europe, then

Question

Quizplus · Accepted Answer

If the inflation rate increases in the U.S. but remains unchanged in Europe, then the purchasing power of the U.S. dollar will decrease relative to the euro. This means that U.S. goods will become more expensive for European consumers, as they would need to exchange more euros to purchase the same amount of U.S. goods as before.

All Else Equal, If the Inflation Rate Increases in the U.S