Suppose a Country Is Perceived to Have an Overvalued Real

question 52

Multiple Choice

Suppose a country is perceived to have an overvalued real exchange rate does not devalue.Which of the following would we expect to occur over time?

• A)a reduction in its price level
• B)a real depreciation of its currency
• C)a reduction in its trade surplus
• D)all of the above
• E) none of the above

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