If the rate of inflation in Tomturkistan increased suddenly, what effect would that have on the exchange rate of Tomturkistan currency for U.S. dollars?
A) More U.S. dollars would be needed to purchase the same quantity of Tomturkistan goods as before inflation.
B) One U.S. dollar would purchase more Tomturkistan currency.
C) Tomturkistan currency would purchase more U.S. goods than before.
D) There would be no change; inflation is a domestic problem only.

Question

Quizplus · Accepted Answer

When inflation increases in Tomturkistan, its currency typically depreciates, meaning one U.S. dollar would purchase more Tomturkistan currency.

If the Rate of Inflation in Tomturkistan Increased Suddenly, What