If There Is a Permanent Increase of 8% in the Domestic

question 86

Multiple Choice

If there is a permanent increase of 8% in the domestic money supply, then which of the following will be true in the long run?

• A) Prices will decrease by 8%.
• B) Prices will increase by 4%.
• C) The home country currency will depreciate by 8%.
• D) The home country currency will appreciate by 4%.

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