Under Fixed Exchange Rates, Which One of the Following Statements

question 24

Multiple Choice

Under fixed exchange rates, which one of the following statements is the MOST accurate?

• A) Devaluation causes a rise in output.
• B) Devaluation causes a decrease in output.
• C) Devaluation has no effect on output.
• D) Devaluation causes a rise in output and a decrease in official reserves.
• E) Devaluation causes a decrease in output and in official reserves.

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