Exchange controls used by a country's government to maintain an overvalued exchange rate result in considerable costs to the country. Explain the situation with a diagram and use it to show the deadweight loss. Describe the role that bribery and parallel markets can play in economies with exchange controls.

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The Answer of Exchange controls used by a country's government to maintain an overvalued exchange rate result in considerable costs to the country. Explain the situation with a diagram and use it to show the deadweight loss. Describe the role that bribery and parallel markets can play in economies with exchange controls.

Exchange Controls Used by a Country's Government to Maintain an Overvalued