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If There Is a Temporary Increase in the Money Supply

Question 80

Multiple Choice

If there is a temporary increase in the money supply in the Eurozone, ceteris paribus, what is the result for the United States?


A) The money supply in the United States must decrease by the same proportion.
B) The U.S. dollar nominal interest rate will increase, as the euro rate is unchanged.
C) Long-run expectations shift to expect a stronger euro.
D) The dollar appreciates against the euro.

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