What causes appreciation in currency?
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Which one of the following statements is the MOST accurate?
(a) A permanent increase in a countryâs money supply causes a proportional long-run depreciation of its currency against foreign currencies.
(b) A temporary increase in a countryâs money supply causes a proportional long-run depreciation of its currency against foreign currencies.
(c) A permanent increase in a countryâs money supply causes a proportional long-run appreciation of its currency against foreign currencies.
(d) A permanent increase in a countryâs money supply causes a proportional short-run depreciation of its currency against foreign currencies.
(e) A permanent increase in a countryâs money supply causes a proportional short-run appreciation of its currency against foreign currencies.
Given a two-country world, assume Canada and Sweden devalue their currencies by 20 percent. This would result in:
a. An appreciation in the Canadian currency.
b. An appreciation in the Swedish currency.
c. An appreciation in neither currency.
d. An appreciation in both currencies
Exports are:
A. Positively related to domestic income and currency depreciation
B. Positively related to income in the rest of the world and currency depreciation
C. Positively related to income in the rest of the world and currency appreciation
D. Positively related to domestic income and currency appreciation
