McqMate
| Q. |
Under a fixed exchange standard, if the domestic demand for foreign exchange increases |
| A. | the central monetary authority must meet the demand out of its reserves. |
| B. | the central monetary authority must increase the supply of domestic money. |
| C. | the fixed exchange standard will breakdown. |
| D. | inflation will increase. |
| Answer» B. the central monetary authority must increase the supply of domestic money. | |
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