An exchange rate shock would have much more serious economic consequences in a developed country than in a developing country.

Question

Quizplus · Accepted Answer

Developing countries often have less diversified economies and are more reliant on imports and exports for basic goods and services, making them more vulnerable to exchange rate fluctuations. Developed countries typically have more robust financial systems and diversified economies that can better absorb such shocks.

An Exchange Rate Shock Would Have Much More Serious Economic