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Macroeconomics

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Moderate

Exchange Rate Depreciation

MACRO-FCNKLN

Which of the following should lead to a depreciation in country Z's currency?

A

An increase in real income in country Z coupled with increased political risk in country Z.

B

An increase in government spending and an increase in real interest rates in country Z.

C

A decreased desire by the population of country Z to save, and an increased desire to consume domestic products.

D

A reduction in tariffs in country Z and a reduction in the desire to save by residents of country Z.