Which of the following would most likely cause a nation's currency to depreciate?

Question

Quizplus · Accepted Answer

An increase in a nation's domestic inflation rate would most likely cause its currency to depreciate because the higher inflation rate decreases the purchasing power of the currency, making it less attractive to foreign investors and traders. This leads to a decrease in demand for the currency, causing its value to decline in the foreign exchange market.

Which of the Following Would Most Likely Cause a Nation's