Under Fixed Exchange Rates, Which One of the Following Statements

question 68

Multiple Choice

Under fixed exchange rates, which one of the following statements is the MOST accurate?

• A) Devaluation causes a decrease in output, a decrease in official reserves, and a contraction of the money supply.
• B) Devaluation causes a rise in output, a rise in official reserves, and an expansion of the money supply.
• C) Devaluation causes a rise in output and a rise in official reserves.
• D) Devaluation causes a rise in output and an expansion of the money supply.
• E) Devaluation causes a rise in official reserves, and an expansion of the money supply.

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