Which of the following is an argument of opponents of devaluations? O A devaluation causes a nation with fixed exchange rates to lose credibility in the medium run, driving its interest rate higher. O Devaluations have no impact on domestic output. Devaluations cause relatively slow adjustments. Participants in foreign exchange markets have a short memory: if the expected devaluation doesn't occur within a short time-period, they will stop expecting it.

Which of the following is an argument of opponents of devaluations? O A devaluation causes a nation with fixed exchange rates to lose credibility in the medium run, driving its interest rate higher. O Devaluations have no impact on domestic output. Devaluations cause relatively slow adjustments. Participants in foreign exchange markets have a short memory: if the expected devaluation doesn't occur within a short time-period, they will stop expecting it.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter29: International Finance

Section: Chapter Questions

Problem 8P

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