Money supply in response to adverse demand

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Reference no: EM131392045

Suppose that country A pegs its currency to that of country B. Now suppose that there is an adverse demand shock in country A. Country B is more likely to cooperate and increase its money supply in response to A's adverse demand shock when:

A. country B's output is below its preferred level.

B. country B is experiencing high rates of inflation.

C. country B wants country A to devalue its currency.

D. country A is experiencing high rates of inflation.

Reference no: EM131392045

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