Which of the following is likely to cause a depreciation of the domestic currency? expansionary monetary...

Which of the following is likely to cause a depreciation of the domestic currency?

		expansionary monetary policy
		contractionary monetary policy
		expansionary fiscal policy.
		rising domestic interest rates.

Expert Solution

Rising domestic interest rates.

Explanation:

Depreciation of domestic currencies occurs when there is decline in the value of domestic currency in relation to any other foreign currency.Rising domestic interest rate is likely to cause a depreciation of the domestic currency due to expected higher rate of inflation,thus it has triggering effect in the depreciation of domestic currency.

Rahul Sunny answered 2 years ago

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