Question

The U.S. economy is on the track of sustainable growth now. This leads to fears of inflation and likely action by the Federal Reserve to raise interest rates to contain the inflation. Based on the asset pricing approach, the U.S. dollar is going to become weaker.

Select one:

True

False

Answer 1

the given statement is FALSE because when there is sustainable growth in the economy and then there would be increase in the interest rates in the economy, it would be meaning that the United States dollars are going to appreciate because there is a constant growth in the economy which is spurting out of constant increase in interest rate due to increase in the growth and such inflation should be countered by increasing interest rate and it's not be reflected negatively on the domestic currency. United States dollars are going to appreciate

The given statement is FALSE.