Mexico Recently Printed More Currency,causing the Supply of the Peso

question 53

Multiple Choice

Mexico recently printed more currency,causing the supply of the peso to increase while demand stayed the same.Which of the following is NOT a likely outcome of this scenario?

• A) the value of the peso will decrease
• B) investors will be prompted to sell-off pesos
• C) the world market will respond quickly
• D) inevitable investor sell-offs will cause the appreciation of the peso

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Definitions:

Aggregate Supply

The total supply of goods and services that firms in an economy are willing and able to sell at a given price level in a specific period.

Government Purchases

Expenditures by the government on goods and services that directly increase the economy's productive capacity.

Autonomous Net Taxes

Taxes that are not influenced by the level of economic activity, such as fixed taxes.

Government Purchases

Government purchases refer to spending by government entities on goods and services that directly contribute to the economy's aggregate demand.