Suppose Country a Pegs Its Nominal Exchange Rate to Country

question 40

Multiple Choice

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

• A)a real appreciation.
• B)a worsening trade position.
• C)an increase in the real exchange rate.
• D)all of the above
• E) none of the above

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Definitions:

UN Human Development Index

The UN Human Development Index is a statistical tool used to measure a country's overall achievement in its social and economic dimensions, such as health, education, and standard of living.

Reliability

The degree to which an assessment tool produces stable and consistent results over time.

Validity

The quality of being logically or factually sound; in research, it refers to the extent to which a concept, conclusion or measurement is well-founded and corresponds accurately to the real world.

Concepts

Fundamental ideas or general notions that form the basis of thoughts, theories, and studies across various disciplines.