Exchange Rate Shocks Are Accompanied by ____ Rates of Inflation

question 30

Multiple Choice

Exchange rate shocks are accompanied by ____ rates of inflation and ____ real GDP.

• A) low, low
• B) low, high
• C) high, high
• D) high, low
• E) low, moderate

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Definitions:

Obligation

A duty or commitment that one is bound to by law, promise, moral principles, or social custom.

Social Contract

A theory in political philosophy suggesting that the legitimacy of authority comes from an implicit agreement between the governing and the governed.

Legitimacy

The general belief that a rule, institution, or leader has the right to govern or dictate.

Authority

The power or right to give orders, make decisions, and enforce obedience.