Multiple Choice
In 2002 it looked like the Argentinean government might default on its debt (which eventually it did) . Which of the following is consistent with what the open-economy macroeconomic model predicts?
A) This event should have raised Argentinean interest rates and caused the Argentinean currency to appreciate.
B) This event should have raised Argentinean interest rates and caused the Argentinean currency to depreciate.
C) This event should have lowered Argentinean interest rates and caused the Argentinean currency to appreciate.
D) This event should have lowered Argentinean interest rates and caused the Argentinean currency to depreciate.
Correct Answer:
Verified
Correct Answer:
Verified
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