If the Rate of Inflation in Tomturkistan Increased Suddenly, What

question 41

Multiple Choice

If the rate of inflation in Tomturkistan increased suddenly, what effect would that have on the exchange rate of Tomturkistan currency for U.S. dollars?

• A) More U.S. dollars would be needed to purchase the same quantity of Tomturkistan goods as before inflation.
• B) One U.S. dollar would purchase more Tomturkistan currency.
• C) Tomturkistan currency would purchase more U.S. goods than before.
• D) There would be no change; inflation is a domestic problem only.

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