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Exchange Rates Doubt

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Applying to Uni? Let Universities come to you. Click here to get your perfect place 20-10-2014
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    In a freely floating exchange rate system, when the value of a currency tends to fall , how does this cause the prices to rise?
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    It doesn't. When the value of a currency falls, prices stay constant in the domestic economy. Prices of foreign goods however become relatively expensive as you would need more of the domestic currency to buy the same amount of foreign currency.
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    Oh okay. Thank you

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Updated: October 17, 2014
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