Question

If U.S. inflation suddenly becomes much higher than European inflation, the U.S. demand for European goods will ____. In addition, the supply of euros to be sold for dollars will ____; both forces will place ____ pressure on the value of the euro.
a. increase; decline; upwardb. increase; decline; downwardc. decrease; increase; upwardd. decrease; increase; downwarde. none of the above

Answer 1

Answer:

A

Explanation:

Increase, decline, increase.

If the inflation in a Country increases, it will lead to more imports and a devalued currency, therefore more an increased demand for a stronger currency to buy goods will come about. This demand will lead to an increase in the value for the foreign currency needed for trading