Under a Fixed-Rate System,a Country That Followed Policies Leading to a Lower

question 15

Multiple Choice

Under a fixed-rate system,a country that followed policies leading to a lower inflation rate than that experienced by its trading partners would

• A)come under pressure to expand its money supply
• B)restrict the growth of its money supply
• C)experience a balance-of-payments deficit
• D)be forced to buy its currency in the foreign exchange market