2B8B COUNTRY A’S CURRENCY WOULD TEND TO APPRECIATE RELATIVE TO COUNTR...

194.

CSO: 2B8a

LOS: 2B8b

Country A’s currency would tend to appreciate relative to Country B’s currency when

a.

Country A has a higher rate of inflation than Country B.

b.

Country B has real interest rates that are greater than real interest rates in Country A.

c.

Country A has a slower rate of growth in income that causes its imports to lag

behind its exports.

d.

Country B switches to a more restrictive monetary policy.