Under a Flexible Exchange Rate System, Which of the Following

Multiple Choice

Under a flexible exchange rate system, which of the following will be most likely to cause a depreciation in the exchange rate value of the dollar (relative to the English pound) ?

A) An economic boom occurs in England, inducing English consumers to buy more American-made automobiles, trucks, and computer products.
B) Real interest rates in the United States fall lower than real interest rates in England.
C) Restrictive monetary policy in the United States causes inflation to be lower than in England.
D) Attractive investment opportunities in the United States induce English investors to buy stock in U.S. firms.