In a Fixed Exchange Rate Regime,a Reduction in the Price

question 64

Multiple Choice

In a fixed exchange rate regime,a reduction in the price level will cause which of the following?

• A)a real appreciation and a leftward shift in the aggregate demand curve
• B)a real appreciation and no shift in the aggregate demand curve
• C)a real depreciation and a rightward shift in the aggregate demand curve
• D)a real depreciation and no shift in the aggregate demand curve
• E) no change in the real exchange rate, and no change in aggregate demand

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