The analysis considers the ability of domestic and foreign price of adjust to devaluation in the short run ?
Correct answer: A. pass through
- A. pass through
- B. absorption
- C. adjustment mechanism
- D. currency contract period
Explanation
Pass-through measures how a devaluation or depreciation is reflected in domestic and foreign prices. In the short run, the key issue is how quickly exchange-rate changes enter prices.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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