In the Case of Purely Flexible Exchange Rates,a Decrease in Domestic

question 6

Multiple Choice

In the case of purely flexible exchange rates,a decrease in domestic real income,with constant prices and domestic credit,will lead to

• A)an increase in international reserves.
• B)the depreciation of the domestic currency.
• C)the appreciation of the domestic currency.
• D)no change in the value of the domestic currency.

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