Advocates of Flexible Exchange Rates Claim That Under Flexible Exchange

question 71

Multiple Choice

Advocates of flexible exchange rates claim that under flexible exchange rates, a currency

• A) depreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products and increasing the world demand for them.
• B) appreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products and increasing world demand for them.
• C) appreciation caused by decreasing the money supply would reduce unemployment by lowering the relative price of domestic products and increasing world demand for them.
• D) appreciation caused by increasing the money supply would increase unemployment by lowering the relative price of domestic products and increasing world demand for them.
• E) appreciation caused by increasing the money supply would increase unemployment by lowering the relative price of domestic products and by decreasing world demand for them.

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Definitions:

Domesticating

The process of adapting wild plants and animals for human use, making them more suitable for farming, companionship, or as work animals.

Horticultural

Pertains to the art or practice of garden cultivation and management.

Surplus Production

The production of goods or services in quantities greater than needed for personal or local consumption, allowing for trade.

Primary Mode

The most prominent or frequently used method or form of something, particularly in the context of transportation or production.