When a Country Uses a Flexible (Or Floating) Exchange Rate

question 167

Multiple Choice

When a country uses a flexible (or floating) exchange rate, _____ will cause its currency to depreciate in the foreign exchange market.

• A) an increase in interest rates abroad
• B) a decrease in domestic interest rates
• C) a decrease in foreign income
• D) All of these answers are correct.

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Definitions:

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A fixed, generalized belief about a particular group or category of people that oversimplifies their characteristics.

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