In an open economy, a permanent beneficial suply shock (s< 0)implie tha thedomestic real exchange rate wil:Oappreciate as the est of the word buys the domestic curencyOremain unchanged because of fsetig movements n he domestic prie levelOremain unchanged because of ffseting movements in realinteret ratesOdepreciate so as to crowd-in net exports

A supply shock is an unexpected event that shifts the SRAS and could be one of two types: 1).…

In an open economy, a permanent beneficil suppy shock (s < 0) implies that the domestic real exchange rate il: Oappreciate as the restof the world buys the domestic curency Oremain unchanged because of feting movements in he domesticprce evel Oremain unchanged because of ofetin movements in rea interest ates Odepreciate so as o rowodin nt exports

In an open economy, a permanent beneficil suppy shock (s < 0) implies that the domestic real exchange rate il: Oappreciate as the restof the world buys the domestic curency Oremain unchanged because of feting movements in he domesticprce evel Oremain unchanged because of ofetin movements in rea interest ates Odepreciate so as o rowodin nt exports

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 25CTQ: If a countrys currency is expected to appreciate in value, what would you think will be the impact...

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