All of the following statements are true about the real exchange rate, = , EXCEPT
A) a greater change in P (domestic price) compared to a change in P (foreign price) necessitates a rise in the nominal rate, Rn, to keep the real rate unchanged.
B) a pegged exchange rate system requires tight control of the money supply.
C) there is a one-to-one correspondence between the real and nominal exchange rates.
D) an expansionary monetary policy raises the real exchange rate.
A
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Liquidity of an asset refers to:
a. its level of risk. b. whether it is held domestically or overseas. c. the ease with which it can be sold. d. its volatility.
Country X and Country Y are two neighboring countries which are experiencing recession. The government of Country X reduced its expenditure during the recession while Country Y's government increased the supply of money in the economy
Which of the two policies will help the economy to recover from the recession?