Countries with a high rate of inflation relative to the rest of the world would tend to experience:
A) a depreciation of their currency.
B) an appreciation of their currency.
C) a devaluation of their currency.
D) a very rapidly appreciating currency.
E) little change in their exchange rate.

Question

Quizplus · Accepted Answer

A high rate of inflation relative to the rest of the world typically leads to a depreciation of a country's currency because the purchasing power of the currency decreases compared to other currencies.

Countries with a High Rate of Inflation Relative to the Rest