One consequence of high inflation is a(n):
A) appreciating nominal exchange rate.
B) decrease in the price of goods measured in terms of money.
C) depreciating nominal exchange rate.
D) decrease in the price of foreign currencies measured in terms of the domestic currency.

Question

Quizplus · Accepted Answer

High inflation can cause a country's currency to depreciate in value compared to other currencies, leading to a depreciating nominal exchange rate. This means that it takes more of the domestic currency to buy the same amount of foreign currency, which can hurt the purchasing power of individuals and decrease the competitiveness of the country's exports.

One Consequence of High Inflation Is A(n)