The Balassa-Samuelson Effect Can Be Used to Forecast Changes in Real

question 41

Multiple Choice

The Balassa-Samuelson effect can be used to forecast changes in real exchange rates by considering the speed of ______ and ______.

• A) convergence to equilibrium; trend changes in the equilibrium value
• B) adjustment to trade imbalances; budget deficit reduction
• C) innovation and productivity; the deterioration of the peg
• D) adjustment to imbalances in income levels; educational attainment

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Definitions:

Continuum

A continuous sequence or range where elements change gradually without distinct breaks or jumps.

Functionalism

A theoretical approach in sociology that views society as a complex system whose parts work together to promote solidarity and stability.

Socially Constructed

A concept or perception that exists because of collective agreement or social acceptance, not because of inherent natural qualities.

Sexual Identity

An individual's conception of themselves in relation to sexual attraction, behaviors, and orientation, forming a component of one's overall identity.