What assumption is being made regarding demand elasticities

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Reference no: EM132177301

Question: Sometimes the charge is made that a country (e.g., China) is arbitrarily enhancing its current account surplus by keeping its currency at "too low" a value, that is, that exchange market intervention by the central bank is keeping the country's currency depreciated below the free-market equilibrium value. How would such behavior influence the country's exports and imports? What assumption is being made regarding demand elasticities in making the charge of arbitrary enhancement of the surplus? Explain.

Reference no: EM132177301

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