Under a system of floating exchange rates, relatively low productivity and high

Question

Under a system of floating exchange rates, relatively low productivity and high inflation rates in the United States result in: A. an increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in the dollar. B. an increase in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar. C. a decrease in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in the dollar. D. a decrease in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar.

Explanation / Answer

An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in the dollar

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