Which of the following would tend to cause a depreciation of a country's currency?
A) a fall in domestic real GDP
B) a fall in the money supply
C) a rise in k in the foreign country
D) a rising price level in the foreign country

Question

Quizplus · Accepted Answer

A fall in domestic real GDP can lead to a depreciation of the country's currency as it may reduce foreign investors' confidence and demand for the currency, leading to a decrease in its value.

Which of the Following Would Tend to Cause a Depreciation