The Final Market Price of Imports May Not Reflect 100

question 141

Multiple Choice

The final market price of imports may not reflect 100% of changes in the real effective exchange rate because:

• A) exchange rates in many nations are fixed.
• B) there are restrictions on capital inflows.
• C) domestic price distortions, such as markups or taxes, reduce the impact of the exchange rate change.
• D) the government has instituted price controls.

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