Question

Because of a global pandemic, a nation cuts its interest rates in an effort to stimulate its economy. What is the likely effect of this interest rate cut on the value of the nation’s currency?

A) The decrease in interest rates will likely encourage foreign investment in the nation’s currency and lead to a devaluation.
B) The decrease in interest rates will likely discourage foreign investment in the nation’s currency and lead to a devaluation.
C) The decrease in interest rates will likely encourage foreign investment in the nation’s currency and lead to an appreciation.
D) The decrease in interest rates will likely discourage foreign investment in the nation’s currency and lead to an appreciation.

Answer 1

B

The decrease in interest rates will likely discourage foreign investment in the nation’s currency and lead to a devaluation.

Step-by-step explanation:

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