What Is the Effect of a Monetary Contraction in a Fixed

question 88

Multiple Choice

What is the effect of a monetary contraction in a fixed exchange rate system?

• A) It forecasts low interest rates.
• B) It increases the demand for money.
• C) It puts downward pressure on a fixed exchange rate.
• D) It leads to an inflow of money from abroad.
• E) It can lead to high price inflation.

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