Suppose a Country That Is Perceived to Have an Undervalued

question 30

Multiple Choice

Suppose a country that is perceived to have an undervalued real exchange rate does not revalue. Which of the following would we expect to occur over time?

• A) An increase in its trade surplus.
• B) A real appreciation of its currency.
• C) An increase in its price level.
• D) All of the above.
• E) None of the above.

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Definitions:

Conditioned Stimulus

A previously neutral stimulus that, after being associated with an unconditioned stimulus, elicits a conditioned response.

Classical Conditioning

A teaching method involving the repeated association of two stimuli; a reaction originally produced by the second stimulus eventually becomes produced by just the first stimulus.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a reflexive response without prior conditioning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with the unconditioned stimulus, eventually triggers a conditioned response.