When the central bank prints large quantities of money, that money loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

Question

Quizplus · Accepted Answer

This is because an increase in the money supply can lead to inflation, where the prices of goods and services rise due to the increase in available currency. Additionally, the devaluation of the currency can lead to a decrease in its exchange rate with foreign currencies.

When the Central Bank Prints Large Quantities of Money, That