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Questions and Answers
What tends to happen to a country's currency value if it consistently experiences lower inflation rates?
What tends to happen to a country's currency value if it consistently experiences lower inflation rates?
- Decrease in value
- Increase in value (correct)
- Fluctuates randomly
- Remains unchanged
How do higher interest rates affect a country's exchange rate?
How do higher interest rates affect a country's exchange rate?
- Have no impact on the exchange rate
- Result in unpredictable fluctuations in the exchange rate
- Cause a decrease in the exchange rate
- Lead to a rise in the exchange rate (correct)
What does a current account deficit indicate about a country's foreign trade?
What does a current account deficit indicate about a country's foreign trade?
- Balanced trade
- Earning more than spending
- Spending more than earning (correct)
- No impact on foreign trade
How does public debt potentially influence a country's currency value?
How does public debt potentially influence a country's currency value?
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What role does political stability play in a country's exchange rate?
What role does political stability play in a country's exchange rate?
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