Countries with a low rate of inflation relative to the rest of the world would tend to experience:
A) a depreciation of its currency.
B) an appreciation of its currency.
C) a devaluation of its currency.
D) a very rapidly depreciating currency.
E) exchange rate stability.

Question

Quizplus · Accepted Answer

Countries with a low rate of inflation relative to the rest of the world tend to see their currency appreciate in value. This is because their goods become relatively cheaper than foreign goods, increasing demand for their currency to buy these cheaper goods.

Countries with a Low Rate of Inflation Relative to the Rest