Under a currency board regime, if domestic citizens are buying more (imports) from foreigners than they are selling to them (exports),

a. the amount of the domestic currency exchanged for the foreign currency will decrease and, thus, increase the domestic money supply.
b. the amount of the domestic currency exchanged for the foreign currency will decrease and, thus, decrease the domestic money supply.
c. the amount of the domestic currency exchanged for the foreign currency will increase and, thus, increase the domestic money supply.
d. the amount of the domestic currency exchanged for the foreign currency will increase and, thus, decrease the domestic money supply.


D

Economics

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