How Does an Increase in a Country's Money Supply Affect

Multiple Choice

How does an increase in a country's money supply affect its currency exchange rate?

A) It overheats the economy thereby reducing the production levels in the economy.
B) It changes the relative demand and supply conditions in the foreign exchange market.
C) It reduces the rate of inflation thus leading to an appreciation of the currency.
D) It leads to increased lending by banks thereby resulting in more savings.