Suppose the United States Has a Fixed Exchange Rate, and It

question 24

Multiple Choice

Suppose the United States has a fixed exchange rate, and it faces domestic inflation and a trade surplus.Assuming it desires overall balance, if the United States revalues the dollar, other things equal one would expect which of the following to occur?

• A) inflation to become more severe and the trade surplus to become less severe
• B) inflation to become less severe and the trade surplus to become less severe
• C) inflation to become less severe and the trade surplus to become more severe
• D) inflation to become more severe and the trade surplus to become more severe

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Definitions:

Tay-Sachs Disease

A genetic disorder that results in the destruction of nerve cells in the brain and spinal cord.

Meningitis Vaccination

A vaccine given to protect against meningitis, an inflammation of the membranes surrounding the brain and spinal cord, caused by infection.

Untreated Meningitis

A serious and potentially life-threatening condition when the inflammation of the protective membranes covering the brain and spinal cord is not medically addressed.

Encephalitis

An inflammation of the brain, often caused by an infection, leading to symptoms such as fever, confusion, seizures, and headaches.