Which one of the following statements is the MOST accurate?
A) A permanent increase in a country's money supply causes a proportional long-run depreciation of its currency against foreign currencies.
B) A temporary increase in a country's money supply causes a proportional long-run depreciation of its currency against foreign currencies.
C) A permanent increase in a country's money supply causes a proportional long-run appreciation of its currency against foreign currencies.
D) A permanent increase in a country's money supply causes a proportional short-run depreciation of its currency against foreign currencies.
E) A permanent increase in a country's money supply causes a proportional short-run appreciation of its currency against foreign currencies.
Correct Answer:
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