Given an Initial Equilibrium in the Money Market and Foreign

Multiple Choice

Given an initial equilibrium in the money market and foreign exchange market, suppose the Federal Reserve decreases the money supply of the United States.Other things equal, under a floating exchange rate system, demand for the dollar will likely

A) increase, inducing an appreciation in value relative to other currencies.
B) decrease, inducing a depreciation in value relative to other currencies.
C) decrease, inducing an appreciation in value relative to other currencies.
D) increase, inducing a depreciation in value relative to other currencies.