According to economic theory, a country with a high inflation rate will____________

Question

BlackTom AI · Accepted Answer

In economics, the relationship between inflation and a country’s currency value is a key concept to consider. 
Option A: 'see an appreciation in its currency exchange rate.' This is generally incorrect in the context of high inflation. When a country experiences high inflation, its price levels rise relative to other countries, making its goods more expensive abroad and its currency less attractive to hold. This tends to reduce demand for its currency in the foreign exchange markets, leading to depreciation, not appreciation. 
Option B: 'see depreciation in its currency exchange rate.' This is the commonly observed outcome. Higher inflation erodes purchasing power and often prompts investors to move assets to countries with lower inflation and real returns. As a result, the currency tends to weaken, i.e., depreciate, on foreign exchange markets. 
Option C: 'attract greater investment from other countries.' High inflation typically creates economic uncertainty and erodes real returns, which tends to deter, not attract, investment from abroad. Investors prefer stable prices and predictable policy environments, so this statement is unlikely true in this scenario. 
Option D: 'export more goods to other countries.' While depreciation of the currency can eventually make exports more competitive by lowering relative prices, this option states a direct consequence of high inflation without accounting for the mechanism (depreciation) and the time lag. Additionally, high inflation is not itself a guaranteed driver of higher exports; it can also harm export capacity through higher input costs and uncertainty. Therefore this option is not a straightforward or universally correct description of the immediate effect of high inflation on exports. 
Thus, evaluating all options, option B correctly aligns with the standard economic theory: high inflation is associated with depreciation of the country's currency in foreign exchange markets.

According to economic theory, a country with a high inflation rate will____________

查看解析

登录即可查看完整答案

类似问题

A relatively high rate of inflation in the United States will result in

Which of the following can help to explain why higher inflation may lead to currency appreciations?

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单