Multiple Choice
Suppose that a nation has adopted a fixed exchange rate with another country, and has a persistent trade deficit.What is most likely to happen?
A) A gradual increase in the value of its currency
B) A gradual decrease in the value of its currency
C) A "run" on its currency and a sudden appreciation
D) A "run" on its currency and a sudden devaluation
Correct Answer:
Verified
Correct Answer:
Verified
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