A sharp depreciation of the domestic currency after a currency crisis leads to ________.
A)lower import prices
B)lower interest rates
C)decrease in the value of foreign currency-denominated liabilities
D)higher inflation

Question

Quizplus · Accepted Answer

A sharp depreciation of the domestic currency makes imports more expensive, leading to higher inflation as the cost of imported goods and services rises.

A Sharp Depreciation of the Domestic Currency After a Currency