The Likely Effect of a Country Printing Additional Currency to Pay

question 87

Multiple Choice

The likely effect of a country printing additional currency to pay its debts is:

• A)high inflation.
• B)devaluation of the currency.
• C)appreciation of the currency.
• D)A and B

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Definitions:

U.S. Dollar

The sanctioned monetary unit of the United States, commonly employed worldwide as a reference and reserve currency.

Fixed Exchange-rate System

A currency value regime where a country's currency is pegged at a set value to another currency, a basket of currencies, or a commodity like gold.

Foreign Exchange Market

A global decentralized or over-the-counter market for trading currencies, facilitating international trade and investment.

Peg

Fixing the exchange rate of a currency by linking it to another currency or basket of currencies.