If Purchasing-Power Parity Holds,when a Country's Central Bank Increases the Money

question 6

Multiple Choice

If purchasing-power parity holds,when a country's central bank increases the money supply,a unit of money

• A)gains value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy.
• B)gains value in terms of the domestic goods and services it can buy,but loses value in terms of the foreign currency it can buy.
• C)loses value in terms of the domestic goods and services it can buy,but gains value in terms of the foreign currency it can buy.
• D)loses value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy.

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