"Under the monetary approach to exchange rate,a rise in domestic income will cause a depreciation of domestic currency."

Question

Quizplus · Accepted Answer

Under the monetary approach to exchange rate, a rise in domestic income, all else being equal, would typically lead to an appreciation of the domestic currency because it increases demand for domestic currency to purchase domestic goods and services, not a depreciation.

"Under the Monetary Approach to Exchange Rate,a Rise in Domestic