In a Fixed Exchange Rate Regime,a Reduction in the Price

question 64

Multiple Choice

In a fixed exchange rate regime,a reduction in the price level will cause which of the following?

• A)a real appreciation and a leftward shift in the aggregate demand curve
• B)a real appreciation and no shift in the aggregate demand curve
• C)a real depreciation and a rightward shift in the aggregate demand curve
• D)a real depreciation and no shift in the aggregate demand curve
• E) no change in the real exchange rate, and no change in aggregate demand

---

Definitions:

Percent Equivalent

The representation of a value as a fraction of 100 to indicate its proportion of the whole.

Mixed Number

A number consisting of an integer and a proper fraction, such as 3½.

Decimal Equivalent

The decimal form representation of a fraction or percentage.

Percent Equivalent

The percentage representation of a fraction or decimal.