Question 1 (5 points) An anticipated devaluation of a country's exchange rate would: have no effect on output as it is a

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Question 1 5 Points An Anticipated Devaluation Of A Country S Exchange Rate Would Have No Effect On Output As It Is A 1 (71.1 KiB) Viewed 38 times

Question 1 (5 points) An anticipated devaluation of a country's exchange rate would: have no effect on output as it is anticipated lead to a permanent improvement in the trade balance create an initial contraction in output followed by an expansion create an initial expansion in output followed by a contraction Question 2 (5 points) Under fixed exchange rates when fiscal policy is not systematic, a temporary increase in government spending will: will have no effect on the real exchange rate since nominal exchange rates are fixed cause the real exchange rate to appreciate and then slowly depreciate back to equilibrium cause the real exchange rate to depreciate and then slowly appreciate back to equilibrium O create a cycle in the real exchange rate, where it will first appreciate, then depreciate and finally appreciate back towards equilibrium Question 3 (5 points) Comparing flexible with fixed exchange rates, the initial response to a fall in inflation below the foreign inflation rate, the real exchange rate will: will depreciate by the same amount under each system appreciate by the same amount under each system depreciate by more under fixed rates depreciate by more under flexible rates