An increase in a country's money supply causes

Question

Quizplus · Accepted Answer

An increase in a country's money supply leads to inflation, which in turn reduces the value of its currency in the foreign exchange market, causing it to depreciate. Conversely, a reduction in the money supply reduces inflation, which increases the value of a country's currency, causing it to appreciate. Therefore, an increase in the money supply causes the currency to depreciate, and a reduction in the money supply causes the currency to appreciate.

An Increase in a Country's Money Supply Causes