Question
Pleaase help with these MCQ, a lil bit explanation needed Which of the following structural change in the economy lead to a depreciation of the
Pleaase help with these MCQ, a lil bit explanation needed
Which of the following structural change in the economy lead to a depreciation of the equilibrium real exchange rate?
An improvement in the terms of trade
An increase in tradable sector productivity
Stronger capital inflow
All of the above
None of the above
Unambiguous "tell-tale" signs of an undervalued real exchange rate are:
Higher domestic inflation and larger current account deficit
Higher domestic inflation and larger current account surplus
Lower domestic inflation and larger current account deficit
Lower domestic inflation and larger current account surplus
None of the above
A misaligned real exchange rate will eventually "self-correct" toward equilibrium through automatic adjustments, which include:
Excess supply of non-tradables resulting in rising domestic inflation and real appreciation
Excess supply of non-tradables resulting in falling domestic inflation and real depreciation
Excess supply of non-tradables resulting in rising current account surplus and real appreciation
Excess demand for non-tradables resulting in falling domestic inflation and real depreciation
Excess demand for non-tradables resulting in rising current account surplus and real appreciation
Many Asian countries pursued a policy of keeping the real exchange rate undervalued in order to:
Encourage production of tradables relative to non-tradables and encourage consumption of tradables relative to non-tradables
Encourage production of non-tradables relative to tradables and encourage consumption of tradables relative to non-tradables
Encourage production of tradables relative to non-tradables and encourage consumption of non-tradables relative to tradables
Encourage production of non-tradables relative to tradables and encourage consumption of non-tradables relative tradables
None of the above
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