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d) The theory of PPP cannot fully predict the movement of exchange rates, therefore, we should not use it. Is this statement true, false or
d) The theory of PPP cannot fully predict the movement of exchange rates, therefore, we should not use it. Is this statement true, false or uncertain? Explain your answer. [5 points] e) Describe how two countries in a monetary union would adjust to asymmetric demand shocks. Use an example and graphs. State and explain the conditions under which being in a monetary union is particularly costly. [5 points]
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