Which of the Following Can Help to Explain Why Higher

question 46

Multiple Choice

Which of the following can help to explain why higher inflation may lead to currency appreciations?

• A) The interest rate is not the prime target of monetary policy.
• B) Most central banks adjust their policy interest rates expressly so as to keep inflation in check.
• C) Central banks increase the money supply leading to overshooting of the exchange rate.
• D) Inflation will increase the purchasing power of a currency.
• E) The world market does not adjust their currency trade to reflect inflation.

---

Definitions:

Overtime Compensation

Additional pay provided to employees who work beyond the standard hours defined by their contract or by law.

Noncompetition Clause

A provision within a contract that restricts one party from engaging in activities that compete with the other party, typically after the termination of the agreement.

Enforceable

Describes a contract or legal obligation that is valid and can be upheld and compelled by law.

Criteria

Standards, rules, or tests by which something can be judged or decisions are made.