Which of the Following Would Most Likely Cause a Nation's

question 38

Multiple Choice

Which of the following would most likely cause a nation's currency to depreciate?

• A) an increase in the nation's domestic inflation rate
• B) an increase in inflation of the nation's trading partners
• C) a decrease in the nation's domestic inflation rate
• D) an increase in domestic real interest rates

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Definitions:

Broaden-and-build Theory

A psychological theory suggesting that positive emotions broaden one’s awareness and encourage novel, varied, and exploratory thoughts and actions, which over time build an individual’s personal resources.

Risk-as-feelings Hypothesis

The theory suggesting that people’s emotional responses to risky situations play a significant role in their decision-making processes, often overriding rational analysis.

Anxiety

A feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome.

Yerkes-Dodson Law

The Yerkes-Dodson Law is a psychological principle stating that there is an optimal level of arousal for optimal performance; too little or too much arousal can lead to decreased performance.