If it is widely expected that the British economy will experience more rapid inflation than the Australian economy, then the pound will depreciate against the dollar under a system of floating exchange rates.

Question

Quizplus · Accepted Answer

If the British economy is expected to experience more rapid inflation, it would lead to a decrease in demand for pounds, causing its value to depreciate against other currencies, such as the dollar, under a floating exchange rate system.

If It Is Widely Expected That the British Economy Will