Question : Which of the following factors can contribute to the depreciation of a country's currency?
Option 1: Low interest rates.
Option 2: Weak economic performance.
Option 3: Political instability.
Option 4: All of the above.
Correct Answer: All of the above.
Solution : The correct answer is d) All of the above.
All of the factors mentioned in options (a), (b), and (c) can contribute to the depreciation of a country's currency:
a) Low interest rates: When a country's interest rates are low, it can reduce the attractiveness of holding investments in that country's currency. This can lead to a decrease in demand for the currency, causing its value to depreciate.
b) Weak economic performance: If a country's economy is experiencing sluggish growth, high unemployment, or other indicators of weak performance, it can reduce investor confidence and lead to a depreciation of the currency.
c) Political instability: Political instability, such as social unrest, government instability, or policy uncertainty, can undermine investor confidence and lead to a depreciation of the currency.
Question : Which of the following factors can influence the demand for a country's currency in the foreign exchange market?
Option 1: Interest rates
Option 2: Economic indicators
Option 3: Political stability
Option 4: All of the above
Question : Which of the following factors can contribute to the appreciation of a country's currency?
Option 1: High interest rates.
Option 2: Strong economic performance.
Option 3: Increased foreign investment.
Question : Which of the following factors can influence the supply of a country's currency in the foreign exchange market?
Option 2: Capital flows
Option 3: Trade balances
Question : Which of the following factors can cause a currency appreciation?
Option 1: Increase in imports
Option 2: Decrease in interest rates
Option 3: Political instability
Option 4: Trade deficit
Question : Which of the following is an example of a factor that can impact the supply of a country's currency in the foreign exchange market?
Option 1: Political instability
Option 2: Capital controls
Option 3: Economic sanctions
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