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An International Trade Shock Arising from a Sudden Increase in Import

Question 43

Multiple Choice

An international trade shock arising from a sudden increase in import demand is likely to be least disruptive to a country with:


A) a floating exchange-rate system.
B) a fixed exchange-rate system with sterilization.
C) a fixed exchange-rate system without sterilization.
D) a surplus in the overall payment balance.

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