Suppose the country that pegs its currency has an overvalued real exchange rate and that output is currently above the natural level of output. Which of the following will occur as the economy adjusts to this situation?
A) P will decrease over time until Y = Yn.
B) A reduction in the pegged value of the domestic currency will cause a leftward shift of the AD curve.
C) Net exports will increase as the economy adjusts to this situation.
D) Domestic goods will become less competitive as the economy adjusts by itself.
E) none of the above
D
Economics
You might also like to view...
Which of the following is NOT a voluntary exchange?
A) Tom's car is stolen from in front of his house. B) Marie buys groceries. C) Scott pays $10,000 for tuition and fees this semester. D) Emily buys a $1,000 plane ticket to fly from New York to Dallas on short notice.
Economics
Explain why the demand for loanable funds slopes downward and why the supply of loanable funds slopes upward
Economics