The central banks adopt low-interest rates during deflation because the demand for money declines. A country's currency value will rise during deflation compared to before. However, the lower interest rates will make the country unattractive to investors. So, the currency will devalue against USD. Elaborate in detail.

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During deflation when the general price level of goods and services decreases central banks often adopt a policy of lowinterest rates to stimulate economic activity and mitigate the negative effects o... View the full answer