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  9. Q75

KPSC KAS 2020 · Question 75 of 100

In an efficient foreign exchange rate market, an unexpected increase in domestic money supply growth can lead to ____________ .

Economics - Forex

  1. AAn immediate appreciation of a currency
  2. BAn immediate depreciation of a currencyCorrect
  3. CAn immediate decrease in direct foreign investment
  4. DNone of the above

Answer: B. An immediate depreciation of a currency

Explanation

An unexpected increase in domestic money-supply growth leads to immediate depreciation of the currency.

Source: KPSC Gazetted Probationers Prelims Paper-I 24-08-2020 (Subject Code 388), Official Key Chart Series A

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