The main reason why "overshooting" occurs is
A) not known.
B) trade flows.
C) a slow adjustment of goods markets relative to financial markets.
D) currency substitution.
Correct Answer:
Verified
Q12: The assumption of imperfect substitution between assets
Q13: With exchange rates, central banks make currencies
Q14: When countries follow different policies, currency substitution
Q15: A high degree of currency substitution
A) breeds
Q16: refers to central banks offsetting international reserve
Q18: Countries cannot become independent in terms of
Q19: Which of the following may not be
Q20: We should expect currency substitution to be
Q21: What is the role of "trade flows"
Q22: With perfect capital mobility, uncovered interest parity
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