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Basic Question 3 of 8

Which is NOT an assumption of the monetary approach?

A. The PPP holds.
B. There is sufficient slack in the economy to allow changes in output.
C. The rate of inflation changes because of money supply changes.

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Craig Baugh

Craig Baugh

Learning Outcome Statements

explain the potential effects of monetary and fiscal policy on exchange rates;

CFA® 2025 Level II Curriculum, Volume 1, Module 8.