If currency speculators believe South Korea will have much lower inflation in the future than the United States, then this event is most likely to cause the South Korean won to

A) depreciate and the U.S. dollar to depreciate.
B) depreciate and the U.S. dollar to appreciate.
C) appreciate and the U.S. dollar to appreciate.
D) appreciate and the U.S. dollar to depreciate.

Question

Camila Trimmino · Accepted Answer

Final Answer : D, Explanation :  Lower inflation in South Korea compared to the United States makes the South Korean won more attractive to investors, leading to its appreciation. Conversely, the U.S. dollar would depreciate relative to the won.

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