________ in the expected future domestic exchange rate causes the demand for domestic assets to decrease and the domestic currency to ________,everything else held constant.

Question

Quizplus · Accepted Answer

A decrease in the expected future domestic exchange rate means that the domestic currency is expected to be worth less in the future. This makes domestic assets less attractive to foreign investors, decreasing the demand for domestic assets and causing the domestic currency to depreciate.

________ in the Expected Future Domestic Exchange Rate Causes the Demand