If the inflation rate in the United States is greater than the inflation rate in Sweden, other things held constant, the Swedish currency will
A) Appreciate against the U.S. dollar.
B) Depreciate against the U.S. dollar.
C) Remain unchanged against the U.S. dollar.
D) Appreciate against other major currencies.
E) Appreciate against the dollar and other major currencies.

Question

Quizplus · Accepted Answer

If the inflation rate in the United States is greater than the inflation rate in Sweden, the value of the U.S. dollar will decrease relative to the Swedish krona. Therefore, the Swedish currency will appreciate against the U.S. dollar.

If the Inflation Rate in the United States Is Greater