Suppose Country a Pegs Its Nominal Exchange Rate to Country

question 20

Multiple Choice

Suppose country A pegs its nominal exchange rate to country B and that country A has a lower inflation rate than country B.In this situation,country A will experience

• A)a real depreciation.
• B)a better trade position.
• C)a reduction in the real exchange rate.
• D)all of the above
• E) none of the above

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