A ____ home currency can ____ domestic inflation.

Question

Quizplus · Accepted Answer

A strong home currency will decrease domestic inflation as imported goods become cheaper, and domestic producers will have to lower their prices to remain competitive. A weak home currency, on the other hand, will increase domestic inflation as imported goods become more expensive, and domestic producers may raise their prices to take advantage of the higher demand for domestically produced goods. Therefore, options A and B are not correct, and option C is the best choice.

A ____ Home Currency Can ____ Domestic Inflation

A Home Currency Can Domestic Inflation