An exchange rate shock would have much more serious consequences in a _____ country than in a _____ country.
A) developed, developing
B) developing, developed
C) high-income, low-income
D) high-income, middle-income
E) Asian, Latin American

Question

Quizplus · Accepted Answer

Developing countries are generally more vulnerable to exchange rate shocks due to factors like less diversified economies, reliance on imports for essential goods, and weaker financial systems. Developed countries, with more diversified economies and stronger financial systems, can better absorb such shocks.

An Exchange Rate Shock Would Have Much More Serious Consequences