2B8B COUNTRY R’S CURRENCY WOULD TEND TO DEPRECIATE RELATIVE TO COUNTR...
195.
CSO: 2B8a
LOS: 2B8b
Country R’s currency would tend to depreciate relative to Country T’s currency when
a.
Country R switches to a more restrictive monetary policy.
b.
Country T has a rapid rate of growth in income that causes imports to lag behind
exports.
c.
Country R has a rate of inflation that is lower than the rate of inflation in Country T.
d.
Country R has real interest rates that are lower than real interest rates in Country T.
Section C: Decision Analysis and Risk Management