When a country's central bank increases the money supply, which of the following best predicts the consequences?

Question

Quizplus · Accepted Answer

When a country's central bank increases the money supply, it leads to inflationary pressures, which in turn cause the prices to rise. As the prices rise, the purchasing power of the currency decreases, and demand for the currency falls, causing its value to depreciate relative to other currencies in the world. Therefore, option B is the best prediction of the consequences of increasing the money supply.

When a Country's Central Bank Increases the Money Supply, Which