What happens to the exchange rate between the US dollar and the euro if the US has a higher inflation rate than Europe?
The Money View: The Illusion of Control

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5 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The dollar appreciates against the euro.
The dollar depreciates against the euro.
The exchange rate remains unchanged.
The euro depreciates against the dollar.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In the 19th century, what was the primary goal of central banks regarding exchange rates?
To stabilize domestic inflation rates.
To allow exchange rates to fluctuate freely.
To keep exchange rates pegged to gold.
To manipulate interest rates for economic growth.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How did pegging exchange rates to gold affect inflation in the 19th century?
It caused inflation to rise significantly.
It had no effect on inflation.
It indirectly stabilized inflation relative to other countries.
It led to deflation in most countries.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the focus of central bank policies in the 21st century?
Increasing foreign exchange reserves.
Maintaining gold reserves.
Targeting domestic inflation rates.
Stabilizing exchange rates through gold pegging.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which concepts are relevant for understanding short-run exchange rate movements in the 21st century?
Bilateral exchange rate parity.
Gold standard parity.
Covered and uncovered interest parity.
Purchasing power parity.
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