Suppose Country a Pegs Its Nominal Exchange Rate to Country

question 24

Multiple Choice

Suppose country A pegs its nominal exchange rate to country B, and that country A has a higher inflation rate than country B. In this situation, country A will experience:

• A) a worsening trade position.
• B) an increase in the real exchange rate.
• C) a decrease in domestic demand.
• D) All of the above.
• E) None of the above.

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Definitions:

Classical Conditioning

A training routine where two stimuli are continuously associated; the reaction, at outset evoked by the second stimulus, ultimately becomes evoked by the first stimulus solely.

Immediate Reinforcers

Rewards or consequences that immediately follow a behavior, significantly affecting the likelihood of the behavior occurring again.

Controlled Events

Situations or occurrences that are directly managed or governed by someone or something to ensure a desired outcome.

Classical Conditioning

A learning approach that consists of pairing two stimuli together repeatedly; a reaction that is originally elicited by the second stimulus is at last elicited by the first stimulus alone.