When Germany was asked to pay 132 billion gold marks in wa

Printing more money while keeping the growth of the economy (total valuation of the economy constant) devalues the currency.

It is more like for a price of one, you are giving out two bills - Obviously one of the two bills will represent 50% of the price and hence devalues the currency.

When Germany was asked to pay 132 billion gold marks in war reparations following World War I, the German government had to print money to pay its bills, drastically devaluing the currency. In response to this anticipated de- valuation, Germans began spending their money while it still had purchasing power, almost completely depleting the monetary stores of domestic banks.

Premise : Germany is printing money -> Devaluing the currency.
Premise : Citizens are spending money from the banks which is deleting the bank reserves.
Conclusion : The mark will get devalued even more.

Which of the following, if true and taken together with the information above, best supports the conclusion that the devaluation of the German mark was likely to continue?

(A) The recipient governments of the war reparations began to demand that the reparations be paid in goods and commodities, such as coal.
-> It shouldn't devalue the mark as govt is not diluting the money reserve but giving out from it's commodities reserve - Incorrect

(B) The amount of 132 billion gold marks was the largest war reparations amount ever levied to that point.
-> Out of scope - Incorrect

(C) In the post-World War I period, the German government had only two options for preventing complete economic collapse: print money or take out loans from domestic banks.
-> Govt doesn't have any other choice but to print money again as bank reserve has dried up - Correct

(D) Printing currency causes inflation when the money is not based on hard assets such as gold or land.
-> We are not talking about the inflation Out of scope - Incorrect

(E) The more consumers make purchases, the more money is returned into a country’s economy.
-> That should increase the mark valuation and not decrease it - Incorrect