What would you expect to occur if the rate of expected inflation in Canada is considerably lower than expected inflation in Germany?
A)The expected spot rate of DM/$will increase
B)The current spot rate of DM/$will increase
C)The Dollar should appreciate against the mark
D)The Dollar should depreciate against the mark

Question

Quizplus · Accepted Answer

If Canada's inflation rate is lower than Germany's, the purchasing power of the Canadian dollar is expected to be stronger, leading to an appreciation of the dollar against the German mark.

What Would You Expect to Occur If the Rate of Expected