In response to the overvalued dollar in the early 1970s,the German Bundesbank bought dollars and sold marks to keep the exchange rate fixed,gaining international reserves. The huge purchase of international reserves meant that the German monetary base began to ________,leading to ________ growth in the German money supply.

Question

Quizplus · Accepted Answer

The Bundesbank's purchase of dollars and sale of marks led to an increase in international reserves, which in turn led to a rapid growth in the German money supply due to the expansion of the monetary base. Therefore, option D is the correct choice.

In Response to the Overvalued Dollar in the Early 1970s,the