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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