What is the typical impact of a fiscal expansion in the UK on the value of the pound sterling?

Show Answers

It has an unpredictable influence on the pound's exchange rate.It does not influence the exchange rate of the pound sterling.It generally causes the pound sterling to strengthen in value.It usually results in the pound sterling losing value.It leads to no change in the pound's purchasing power.

Explanation

A fiscal expansion in the UK usually leads to an appreciation of the pound sterling. This occurs because increased government spending or tax cuts can stimulate economic growth, attracting foreign investment and increasing demand for the currency. Therefore, option C is correct.