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Under a Floating Exchange Rate Regime, with a Contraction in the Money

Question 35

Multiple Choice

Under a floating exchange rate regime, with a contraction in the money supply, which of the following is likely to happen in the short-run?


A) Increase in the country's holdings of official international reserves
B) Deficit in the financial account
C) Inflow of foreign capital
D) Rise in the domestic price level

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