Post Utme Rhema University 2017 Economics Question 26

Practice objective / multiple choice question 26 from the 2017 Post Utme Rhema University Economics examination.

Post Utme Rhema University 2017 Economics Objective / Multiple Choice

Question 26 POST_UTME_RHEMA_UNIVERSITY • 2017 • ECONOMICS • objective

Consider a small open economy with a fixed exchange rate. Suppose the country's trade balance is in surplus, and the central bank decides to sell foreign exchange to the market. What will be the effect on the country's money supply?

Answer Options

A. The money supply will increase

Correct Answer B. The money supply will decrease

C. The money supply will remain unchanged

D. The money supply will increase, but at a slower rate

Correct Answer

Correct Option:

The money supply will decrease

About This Question

This is Post Utme Rhema University 2017 Economics Question 26. It is one of the objective questions from the 2017 Post Utme Rhema University Economics examination.

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