Everything else equal, which government policy would cause a country's currency to depreciate?
A) expansionary monetary policy
B) contractionary monetary policy
C) expansionary fiscal policy
D) contractionary exchange rate policy
E) a combination of higher taxes and lower spending.

Question

Quizplus · Accepted Answer

Expansionary monetary policy, which involves increasing the money supply, typically leads to a depreciation of the country's currency. This is because an increase in money supply can lead to lower interest rates, which reduces foreign investment in the country's assets, decreasing demand for the currency and thus causing it to depreciate.

Everything Else Equal, Which Government Policy Would Cause a Country's