When looking at exchange rates between two countries, there is a _____ relationship between the rate of depreciation in one country's currency and the extent to which the country's _____ exceeds that of the other country.

Question

Quizplus · Accepted Answer

A positive relationship exists between the rate of depreciation in a country's currency and the extent to which the country's inflation rate exceeds that of another country. Higher inflation in a country relative to another leads to a depreciation of its currency.

When Looking at Exchange Rates Between Two Countries, There Is