If the price level rises in Australia but not in foreign nations and the current exchange rate does not change, the expected future exchange rate
A)stays the same.
B)rises.
C)falls.
D)You can't tell from the given information.

Question

Quizplus · Accepted Answer

If the price level rises in Australia but not in foreign nations, Australian goods become relatively more expensive compared to foreign goods. This would lead to a decrease in demand for Australian currency, causing the expected future exchange rate to fall.

If the Price Level Rises in Australia but Not in Foreign