Deflation would cause currency appreciation, ceteris paribus.

Name: Deflation would cause currency appreciation, ceteris paribus.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Deflation refers to a decrease in the general price level of goods and services, which increases the purchasing power of money. A higher purchasing power of money causes an increase in demand for the currency and, therefore, leads to currency appreciation, assuming other factors remain constant (ceteris paribus).

Deflation Would Cause Currency Appreciation, Ceteris Paribus