As inflation in any "Eurozone" country increases, while the U.S. experiences no change in inflation, the exchange rate of the euro to the dollar will increase.

Question

Quizplus · Accepted Answer

Inflation in a Eurozone country relative to stable inflation in the U.S. typically leads to a depreciation of the euro against the dollar, not an increase in the exchange rate, because higher inflation in the Eurozone decreases the euro's purchasing power relative to the dollar.

As Inflation in Any "Eurozone" Country Increases, While the U