Final answer:
Option c is the correct answer. The least likely impact of a stronger currency is a higher inflation rate and reduced investor confidence as a stronger currency typically reduces import costs and may signal economic strength, boosting investor confidence.
Step-by-step explanation:
Exchange rate movements affect different market participants in various ways. The question asks which of the following choices is the least likely impact associated with a stronger currency for a country:
- a) decreased foreign investment and slower economic growth
- b) Lower costs of imports and improved consumer purchasing power
- c) Higher inflation rate and reduced investor confidence
The least likely impact of a stronger currency is c) higher inflation rate and reduced investor confidence. A stronger currency usually leads to lower imported inflation, as imports become cheaper. Additionally, it can also boost investor confidence as it reflects a strong economic standing. In contrast, option a) and b) are more likely to be direct outcomes of a stronger currency. A stronger currency can lead to decreased foreign investment as it makes a country's exports more expensive on the international market. It also lowers the cost of imports and improves purchasing power for consumers within the country since foreign goods and services become relatively cheaper.