Under a Fixed Exchange Standard,if the Domestic Demand for Foreign

question 23

Multiple Choice

Under a fixed exchange standard,if the domestic demand for foreign exchange increases

• A)the central monetary authority must meet the demand out of its reserves.
• B)the central monetary authority must increase the supply of domestic money.
• C)the fixed exchange standard will breakdown.
• D)inflation will increase.
• E)the domestic currency must be depreciated.

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