3267EconomicsMedium
Exchange rate overshooting often occurs because?
Aelasticities are smaller in the short run than the long run
Belasticities are smaller in the long run than the short run
Cmilitary spending during military conflicts
Ddomestic prices adjust slowly to shifts in demand
Correct answer
A. elasticities are smaller in the short run than the long run
Explanation
The correct answer is elasticities are smaller in the short run than the long run.