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Under a Fixed Exchange Rate System,if the Government Decides to Devalue

question 50

Multiple Choice

Under a fixed exchange rate system,if the government decides to devalue its currency,net exports will ________ and the IS curve will shift to the ________.


Definitions:

Short Run

The short run in economics is a period during which at least one input, such as plant size, is fixed and cannot be changed.

Price Discrimination

A pricing strategy where identical or substantially similar products or services are sold at different prices to different buyers.

Physically Separated

A state or condition where two or more entities are not connected or in direct contact with each other, often referring to geographical distance.

Elastic Demand

A situation where the demand for a product or service significantly changes in response to price fluctuations, with greater sensitivity indicating higher elasticity.

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