Assume That Policy Makers Are Pursuing a Fixed Exchange Rate

question 50

Multiple Choice

Assume that policy makers are pursuing a fixed exchange rate regime and that the economy is initially operating at the natural level.Which of the following will occur as a result of a evaluation?

• A)The real exchange rate will be permanently higher in the medium run.
• B)The real exchange rate will be permanently lower in the medium run.
• C)The effects of this devaluation on the real exchange rate will be ambiguous in the medium run.
• D)The nominal exchange rate will initially increase in the short run and then decrease in the medium run.
• E) none of the above

---

Definitions:

Iatrogenesis

Harm caused by the medical system itself, including errors, adverse effects of drugs, and infections acquired in hospitals.

Elder Abuse

Involves harming or putting elderly individuals at risk, either through actions or failure to act, by individuals in a position of trust.

Ageism

Discrimination or prejudice against individuals based on their age, often focused on older adults but can affect younger people as well.

Healthy Aging

Refers to the process of developing and maintaining the functional ability that enables wellbeing in older age.