If the price level rises in the United States., the expected future exchange rate

Question

Quizplus · Accepted Answer

The expected future exchange rate is affected by many factors, including the relative inflation rates between countries. In this case, if the price level in the United States rises, this means that there is inflation in the US economy. As a result, the purchasing power of the US dollar decreases, causing the exchange rate to fall. Therefore, the correct choice is A.

If the Price Level Rises in the United States