Suppose a country is perceived to have an overvalued real ...

[go.lag]

Suppose a country is perceived to have an overvalued real exchange rate does not devalue. Which of the following would we expect to occur over time?
 
  A) a reduction in its price level
  B) a real depreciation of its currency
  C) a reduction in its trade surplus
  D) all of the above
  E) none of the above

Question 2

Suppose two countries are identical in every way with the following exception. Economy A has a greater quantity of human capital than economy B. Given this information, we know with certainty that
 
  A) steady state consumption in A is higher than in B.
  B) steady state consumption in A is lower than in B.
  C) steady state consumption in A and in B are equal.
  D) steady state growth of output per worker is higher in A than in B.

[lorealeza]

Answer to Question 1

D

Answer to Question 2

A