Countries experiencing a relatively lower rise in prices will generally see an appreciation in the value of their currency. An increase in the rate of a country's charges for loans results in apprecia- tion of its currency on the interna- tional market. This results in loss of income and usually lower interest rates, leading to a depreciation in the value of a nation's currency. A country that is perceived as being stable is more attractive to foreign investors, resulting in an apprecia- tion of the stable country's currency. a. b. C. d. political stability interest rate inflation rate recession VI A

Countries experiencing a relatively lower rise in prices will generally see an appreciation in the value of their currency. An increase in the rate of a country's charges for loans results in apprecia- tion of its currency on the interna- tional market. This results in loss of income and usually lower interest rates, leading to a depreciation in the value of a nation's currency. A country that is perceived as being stable is more attractive to foreign investors, resulting in an apprecia- tion of the stable country's currency. a. b. C. d. political stability interest rate inflation rate recession VI A

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 30CTQ: Many developing countries, like Mexico, have moderate to high rates of inflation. At the same time,...

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