Question

which of the following is likely to increase the value of a country’s currency? a. the country’s imports are higher than its exports. b. the country has high inflation. c. the country has a lot of debt. d. the country has a high interest rate.

Explanation:

than exports (A) creates more supply of the currency, lowering its value; high inflation (B) erodes currency purchasing power, reducing its value; and high debt (C) raises default risk, decreasing currency demand and value.

Answer:

than exports (A) creates more supply of the currency, lowering its value; high inflation (B) erodes currency purchasing power, reducing its value; and high debt (C) raises default risk, decreasing currency demand and value.