If the rate of inflation in the United States exceeds the rate of inflation in Great Britain we would expect the U.S.dollar to depreciate in value against the British pound.

Question

Quizplus · Accepted Answer

When the rate of inflation in one country exceeds that of another, its currency is likely to lose value relative to the other country's currency. This is due to the decrease in purchasing power of the relatively inflationary country's currency, leading to a decrease in demand for it on global markets. Therefore, we can expect the U.S. dollar to depreciate against the British pound if the rate of inflation in the United States exceeds that of Great Britain.

If the Rate of Inflation in the United States Exceeds