If non tradable goods prices rise faster in country A than in country B, and tradable goods

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If non tradable goods prices rise faster in country A than in country B, and tradable goods prices remain unchanged, determine whether currency A will appear to be overvalued or undervalued.

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International Money and Finance

ISBN: 978-0123852472

8th edition

Authors: Michael Melvin, Stefan C. Norrbin

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Question Posted: Mar 09, 2016 06:22 AM

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If non tradable goods prices rise faster in country A than in country B, and tradable goods

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The exchange rate S is determined by traded goods prices so is constant Since the ...View the full answer

International Money and Finance

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