A rise in the domestic inflation rate and a simultaneous fall in the foreign inflation rate lead to:
A) depreciation of the foreign currency
B) depreciation of the domestic currency
C) no change in the exchange rate
D) the effect cannot be determined without knowing the exact changes in inflation rates
Correct Answer:
Verified
Q1: An exchange rate is said to follow
Q3: Some countries have high interest rates and
Q4: A rise in the domestic and foreign
Q5: The government can affect the exchange rate
Q6: Central banks intervene in the foreign exchange
Q7: Which of the following is NOT an
Q8: Which of the following is NOT conducive
Q9: Expectations affect the exchange rate because:
A) arbitrageurs
Q10: A speculative attack on a currency is
Q11: 'News' as used in the exchange rate
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