Which of the following would most likely cause a nation's currency to depreciate?
a. an increase in the nation's domestic inflation rate
b. an increase in inflation of the nation's trading partners
c. a decrease in the nation's domestic inflation rate
d. an increase in domestic real interest rates
A
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What is the "Hotelling rule" for situations in which a producer can determine when a good is sold?
A) Price must rise at exactly the rate of interest. B) Marginal cost must rise at exactly the rate of interest. C) Price minus marginal cost must rise at exactly the rate of interest. D) Price plus marginal cost must rise at exactly the rate of interest. E) Price and marginal cost must be independent of the rate of interest.
Monetary and fiscal policy making that is carried out in response to a pre-set rule and does not respond to changes in economic activity is known as
A) active policy making. B) discretionary policy making. C) nondiscretionary policy making. D) Keynesian policy making.