Question: Why does an exchange rate-output combination lying above DD and below AA jump first to AA in equilibrium? a.Output can adjust immediately. b.Asset prices adjust

Why does an exchange rate-output combination lying above DD and below AA jump first to AA in equilibrium?

a.Output can adjust immediately.

b.Asset prices adjust faster than output.

c.DD slopes downward and AA slopes upward.

d.The intersection of DD and AA is not the short-run equilibrium.

e.An exchange rate can adjust immediately.

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