Q. Under a system of floating Exchange rates, relatively low productivity and high inflation rates in the United States result in:

  • (A) An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciación in the dollar
  • (B) An increase in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar
  • (C) A decrease in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in thedollar
  • (D) A decrease in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar
βœ… Correct Answer: (A) An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciación in the dollar

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