If the Average Rate of Inflation in the World Rises

question 20

Multiple Choice

If the average rate of inflation in the world rises from 5% to 7%, this will tend to make forward exchange rates move toward

• A) smaller premiums or larger discounts in relation to the dollar
• B) larger premiums or smaller discounts in relation to the dollar
• C) no change on average
• D) can't tell what will happen

---

Definitions:

Enforceable

Describes a legal agreement or obligation that can be upheld and compelled by law, allowing one party to ensure compliance by another.

Illegal

Actions or activities that are forbidden by law or statute and subject to criminal or civil penalties.

Exculpatory Clause

A contract provision that releases one party from liability for wrongful acts or negligence.

False Rumour

An untrue statement or tale spread among people, often causing misunderstanding or misinformation.