When the Exchange Rate Depreciates in the Short Run and Then

question 52

Multiple Choice

When the exchange rate depreciates in the short run and then appreciates to its original level in the long run, it implies that the foreign money supply has:

• A) temporarily risen.
• B) permanently risen.
• C) temporarily fallen.
• D) permanently fallen.

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Definitions:

Munich Conference

A series of meetings in 1938 where European leaders sought to appease Adolf Hitler by allowing Nazi Germany to annex the Sudetenland in exchange for a promise of no further territorial demands.

Czechoslovakia

A former country in Central Europe that existed from 1918, following the collapse of the Austro-Hungarian Empire, until its peaceful dissolution into the Czech Republic and Slovakia in 1993.

Appease Hitler

A policy pursued by some European countries in the late 1930s, aiming to avoid conflict with Nazi Germany by conceding to some of Adolf Hitler's demands.

Auschwitz-Birkenau

A complex of concentration and extermination camps operated by Nazi Germany in occupied Poland during World War II, symbolizing human brutality and the Holocaust's horrors.