Advocates of flexible exchange rates claim that under flexible exchange rates, a currency
A) depreciation caused by increasing the money supply would reduce unemployment by increasing world demand for them.
B) appreciation caused by increasing the money supply would reduce unemployment by increasing world demand for them.
C) appreciation caused by decreasing the money supply would reduce unemployment by increasing world demand for them.
D) appreciation caused by increasing the money supply would increase unemployment by increasing world demand for them.
E) appreciation caused by increasing the money supply would increase unemployment by decreasing world demand for them.

Question

Quizplus · Accepted Answer

Advocates of flexible exchange rates argue that currency depreciation caused by increasing the money supply would make exports cheaper and increase demand for them globally, leading to an increase in exports and ultimately reducing unemployment.

Advocates of Flexible Exchange Rates Claim That Under Flexible Exchange