Under Fixed Exchange Rates, Which One of the Following Statements

question 64

Multiple Choice

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

• A) Devaluation causes a reduction of the money supply.
• B) Devaluation has no effect on the stock of money.
• C) Devaluation causes an expansion of the money supply.
• D) Devaluation causes a reduction in output.
• E) Devaluation causes a reduction in official reserves.

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