7. In an efficient foreign exchange market, an unexpected increase in domestic money supply growth can le?

Question

In an efficient foreign exchange market, an unexpected increase in domestic money supply growth can lead to

a. an immediate decrease in systematic risk in internal investments.

b. an immediate depreciation of a currency.

c. an immediate appreciation of a currency.

d. an immediate decrease in direct foreign investment.

Answer 1

b. an immediate depreciation of a currency.