Mexico recently printed more currency,causing the supply of the peso to increase while demand stayed the same.Which of the following is NOT a likely outcome of this scenario?
A) the value of the peso will decrease
B) investors will be prompted to sell-off pesos
C) the world market will respond quickly
D) inevitable investor sell-offs will cause the appreciation of the peso

Question

Quizplus · Accepted Answer

When the supply of a currency increases while demand remains constant, the value of the currency typically decreases, not appreciates. Therefore, investor sell-offs would not cause the peso to appreciate.

Mexico Recently Printed More Currency,causing the Supply of the Peso