According to the Monetary Approach of the Balance of Payments

question 49

Multiple Choice

According to the monetary approach of the balance of payments MABP,if the foreign inflation rate decreases 50%,the U.S.foreign reserves will

• A) increase because foreign central bank buys U.S. dollars and sells its currency.
• B) increase because foreign central bank buys its currency and sells U.S. dollars.
• C) decrease because foreign central bank buys U.S. dollars and sells its currency.
• D) decrease because foreign central bank buys its currency and sells U.S. dollars.

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