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Explain the exchange rate overshooting with diagram. Why is the exchange rate overshooting an important phenomenon? What does it help to explain?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 21RQ: What is the difference between a floating exchange rate, a soft peg, a hard peg, and dollarization?

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Explain the exchange rate overshooting with diagram. Why is the
exchange rate overshooting an important phenomenon? What does it
help to explain?

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