Author Question: Suppose foreign exchange markets anticipate a revaluation for country A. Further assume that policy ... (Read 14 times)

burton19126 · **on:** Jun 30, 2018

Suppose foreign exchange markets anticipate a revaluation for country A. Further assume that policy makers in country A will continue to fix its nominal exchange rate. In order to peg the currency at its original level, which of the following must occur?

A) Increase the domestic interest rate.
B) Increase the domestic price level.
C) Convince trading partners to raise their interest rates.
D) all of the above
E) none of the above

Question 2

Based on our understanding of the model presented in chapter 11, which of the following will cause a permanent increase in growth?

A) an increase in education spending
B) an increase in the saving rate
C) an increase in capital accumulation
D) all of the above
E) none of the above