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

question 125

Multiple Choice

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

• A) an increase in domestic real interest rates
• B) an increase in exports coupled with a decline in imports
• C) an increase in the nation's inflation rate
• D) a balance of trade surplus

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Definitions:

Fiscal Policy Measure

Government policies related to taxation and spending that are used to influence the economy, manage inflation, and stimulate economic growth.

Legislative Action

The process by which a legislative body enacts laws, including the proposal, debate, amendment, and voting on new laws or changes to existing laws.

President

The head of state and/or head of government in a republic, typically elected to be the chief executive officer and hold the highest office in the land.

Multiplier

An economic factor that quantifies the additional economic activity generated from an initial injection of spending.