Poor fiscal and monetary policies of a nation's central bank can cause a drop in inflation, declining budget deficits, and an appreciating currency.

Question

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Poor fiscal and monetary policies are likely to result in high inflation, budget deficits, and a depreciating currency. This is because poor policies such as excessive money printing and low interest rates may increase demand for goods and services, driving up prices, while also increasing the budget deficit due to increased government spending. In turn, the currency may depreciate as foreign investors lose confidence in the economy.

Poor Fiscal and Monetary Policies of a Nation's Central Bank