What is an overvalued exchange rate? Use a graph to explain.
Innova valued exchange rate is
nothing but a country's currency is too high than expected and this
means you are getting more amount of foreign currency for 1 unit of
home currency and this is depicted in the graph above. This
overvalued exchange rate gets to to reduce domestic demand as
inputs will become as Import will become cheap and exports become
expensive and this can lead to higher unemployment in the home
country and tend to reduce economic growth all in all.
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