1. The central bank of Alumina has decreased the money supply to fight inflation. How will this affect the flow of financial capital in and out of Alumina and consequently the value of its currency and its net exports of goods and services? explain 

 

Inflow of Capital                 Value of Currency                  Net Exports

a)      No change                    No change                    No change

b)      Decrease                      Depreciation                          Increase

c)       Increase                        Appreciation                          Decrease

d)      Decrease                      Appreciation                          Decrease

e)      Increase                        Depreciation                          Increase

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