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Question
During inflation, an increase in the amount of currency available leads to:
A. overheating of the economy thereby reducing the production levels in the economy.
B. changes in the relative demand and supply conditions in the foreign exchange market.
C. a reduction in the rate of inflation thus leading to an appreciation of the currency.
D. decreased lending by banks thereby resulting in more savings.
E. a decrease in the demand of goods and services which drives currency value higher.
Answer
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