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Suppose Country a Pegs Its Nominal Exchange Rate to Country

Question 40

Multiple Choice

Suppose country A pegs its nominal exchange rate to country B and that country A has a higher inflation rate than country B.In this situation,country A will experience


A) a real appreciation.
B) a worsening trade position.
C) an increase in the real exchange rate.
D) all of the above
E) none of the above

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