Question (1 Viewer)

[mushi]

an appreciation of the dollar usually leads to an increase of inflation, true?

can someone explain how this works plz, im a bit lost

 

[AGB]

in theory, an appreciation will lead to a decline in imported inflation. as some imported goods are included in the CPI, there will be, ceteris paribus, a reduction in inflation. this is because imports are now cheaper on domestic markets

the opposite is also true for a depreciation i.e. there will be an increase in inflation

 

[mushi]

oh, so i got it the wrong way around then?

appreciation = decrease in inlfation



hehe, stupid me..