WHAT IN CREASES CO NFIDENCE IN THE NATIONAL CURRENCY? a. increased interest on deposits and loans b. price stability c. inflation growth d. the foreign currency predominance of assets and liabilities

## Step 1<br />The question asks us to identify what increases confidence in the national currency. Confidence in a national currency is typically increased when the value of the currency is stable. This stability is usually achieved when the inflation rate is low or stable.<br /><br />## Step 2<br />Inflation growth (option C) can erode the value of a currency, leading to a decrease in confidence. This is because as inflation increases, the purchasing power of the currency decreases, which can lead to a loss of confidence in the currency.<br /><br />## Step 3<br />The foreign currency predominance of assets and liabilities (option D) can also decrease confidence in the national currency. This is because it can indicate a lack of confidence in the national currency, as people are more likely to hold assets and liabilities in foreign currencies.<br /><br />## Step 4<br />Increased interest on deposits and loans (option A) can increase confidence in the national currency. This is because higher interest rates can attract more investment into the country, which can increase the demand for the national currency and thus increase confidence in it.<br /><br />## Step 5<br />Price stability (option B) can also increase confidence in the national currency. This is because when prices are stable, it indicates that the economy is stable, which can increase confidence in the national currency.