With floating exchange rates,easy credit and low short term interest rates lead to
A) Exchange rate depreciation in the short run
B) Exchange rate appreciation in the short run
C) Exchange rate depreciation in the long run
D) Exchange rate appreciation in the long run

Question

Quizplus · Accepted Answer

Easy credit and low short-term interest rates typically increase the money supply, leading to a depreciation of the currency in the short run due to increased spending and investment.

With Floating Exchange Rates,easy Credit and Low Short Term Interest