When There Are Currency Depreciations or Appreciations, How Is the External

question 136

Multiple Choice

When there are currency depreciations or appreciations, how is the external wealth of a nation affected?

• A) It rises (along with its GDP) when there is a depreciation and falls with an appreciation.
• B) It usually does not change because external wealth is related to gold and capital.
• C) The change in wealth depends on the exchange rates with the currencies in which the assets or liabilities are denominated.
• D) If all assets are domestic and all liabilities are foreign, wealth always rises when there is any kind of exchange rate shift.

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