The Balassa-Samuelson model about exchange rates suggests that if the Brazilian real is undervalued by 44%, it would take ____ years for the real to appreciate by half of the original amount of undervaluation at the rate of ___ per year.

Question

Quizplus · Accepted Answer

If the real is undervalued by 44%, appreciating by half of this amount means it needs to appreciate by 22%. At a rate of 4.4% per year, it would take 5 years to reach 22% appreciation (5 * 4.4 = 22).

The Balassa-Samuelson Model About Exchange Rates Suggests That If the Brazilian