The Currency Used in the Duchy of Saxony Is the Ducet.If

question 149

Multiple Choice

The currency used in the Duchy of Saxony is the ducet.If the market equilibrium value of the exchange rate equals $1.40 per ducet,but the ducet is officially fixed at $1.20 per ducet,then the ducet exchange rate is __________ and,to maintain this exchange rate,there will be __________ in the government's stock of international reserves.

• A) undervalued;a net decline
• B) undervalued;a net increase
• C) overvalued;no change
• D) overvalued;a net decline
• E) overvalued;a net increase

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