If inflation in New Zealand suddenly increased while U.S. inflation stayed the same, there would be:
A) an inward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$.
B) an outward shift in the demand schedule for NZ$ and an inward shift in the supply schedule for NZ$.
C) an outward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$.
D) an inward shift in the demand schedule for NZ$ and an inward shift in the supply schedule for NZ$.

Question

Quizplus · Accepted Answer

If inflation in New Zealand increases, the NZ$ becomes less attractive, leading to a decrease in demand (inward shift) and an increase in supply (outward shift) as people exchange NZ$ for more stable currencies.

If Inflation in New Zealand Suddenly Increased While U