Econia increases its money supply. What is likely to happen to the value of Econia's currency in foreign exchange markets and to the level of Econia's net exports?

Question

Quizplus · Accepted Answer

When a country increases its money supply, its currency tends to depreciate in foreign exchange markets because there is more of the currency available. A weaker currency makes the country's exports cheaper and imports more expensive, which tends to increase the level of net exports.

Econia Increases Its Money Supply