If a Country with a Floating Exchange Rate Follows a Contractionary

question 405

Multiple Choice

If a country with a floating exchange rate follows a contractionary monetary policy, with everything else remaining unchanged, it leads to a(n) _____ in interest rates and a(n) _____ in the currency.

• A) increase; depreciation
• B) decrease; appreciation
• C) decrease; depreciation
• D) increase; appreciation

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Definitions:

Ledger

A comprehensive record of all financial transactions that occur in a business, serving as the principal book for accounting and analysis.