Suppose There Are Two Countries That Decide to Peg the Exchange

question 50

Multiple Choice

Suppose there are two countries that decide to peg the exchange rate at its current rate, which of the following must be true in the short run?

• A) Output growth rates must be equal in the two countries.
• B) Price levels must be equal in the two countries.
• C) Inflation rates must be equal in the two countries.
• D) The real exchange rates between the two countries will be equal.
• E) The interest rates must be equal in the two countries.

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Definitions:

Unreasonably Dangerous

A term used to describe products or activities that pose a risk of harm beyond what would be contemplated by an ordinary person under normal usage.

Defective Product

A product that is not safe for its intended use due to a design, manufacturing, or marketing defect, potentially leading to legal liability for the manufacturer.

Section 402A

A specific provision of the Restatement (Second) of Torts, establishing the manufacturer's liability for harm caused by defective products.

Implied Warranty of Merchantability

An assurance that a product will meet a reasonable level of quality and reliability for the purpose it was sold for.