Author Question: Suppose a country that has been pegging its currency is faced with a situation where financial ... (Read 138 times)

strangeaffliction · **on:** Jun 30, 2018

Suppose a country that has been pegging its currency is faced with a situation where financial market participants now expect some future revaluation. In such a situation, we would generally expect which of the following to occur?

A) an increase in the domestic interest rate
B) an announcement by the central bank that a large revaluation will occur in the near future
C) an increase in demand for the country's currency
D) all of the above
E) none of the above

Question 2

Which of the following will likely cause a reduction in output per worker?

A) a reduction in education expenditures
B) a reduction in the saving rate
C) a reduction in on-the-job training
D) all of the above