Price levels and exchange rate in the long run

Front

According to the monetary approach to exchange rates, an increase in a country’s money supply leads to:

Back

A proportional depreciation of the domestic currency

Front

Which of these factors can cause currency depreciation? Options: An increase in domestic productivity, A faster growth in the money supply compared to other countries, A reduction in the money supply, An increase in demand for domestic goods

Back

A faster growth in the money supply compared to other countries

Front

The interest rate differential between two countries is influenced by: Differences in inflation levels, The unemployment rate, Population growth rate, The nominal value of GDP

Back

Differences in inflation levels

Front

If the relative demand for U.S. goods increases, the expected effect on the real exchange rate is:

Back

An appreciation of the U.S. currency

Front

If the European Central Bank increases the money supply, the most likely effect on the EUR/USD exchange rate is:

Back

The euro depreciates against the dollar