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Suppose a Country Is Perceived to Have an Overvalued Real

Question 52

Multiple Choice

Suppose a country is perceived to have an overvalued real exchange rate does not devalue.Which of the following would we expect to occur over time?

A) a reduction in its price level
B) a real depreciation of its currency
C) a reduction in its trade surplus
D) all of the above
E) none of the above

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