Which of the Following Is an Argument of Opponents of Devaluations

question 62

Multiple Choice

Which of the following is an argument of opponents of devaluations?

• A)Devaluations cause relatively slow adjustments.
• B)Participants in foreign exchange markets have a short memory: if the expected devaluation doesn't occur within a short time-period, they will stop expecting it.
• C)A devaluation causes a nation with fixed exchange rates to lose credibility in the medium run, driving its interest rate higher.
• D)all of the above
• E) none of the above

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