[jcgarciarosa]

Assuming exchange rates are allowed 10 fluctuate

freely, which one of the following factors would likely cause

a nation’s currency to appreciate on the foreign exchange

market? •

a. A relatively rapid rate of growth in income that

stimulates imports.

b. A high rate of inflation relative to other countries.

c. A slower rate of growth in income than in other

countries, which causes imports to lag behind exports.

d. Domestic real interest rates that are lower than real

interest rates abroad.

Is letter C but not make me sense.

[KatieM]

the answer is C— if their imports were to lag, this would cause their exports to increase which would cause their currency to appreciate. Whenever exports exceed imports currency appreciates. This is of course how I have figured out this question– I simplified it to layman's terms… if I sell more than I spend my bank account will appreciate… so I will be worth more.

BEC (2/2013-59) - 5/22/2013-2nd attempt
AUD-
REG-
FAR-

[jcgarciarosa]

Thankssssssss I understand now!!!!!!!!!

[Author]

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