Answer to Question #63880 in Finance for genie

Question #63880
Keeping a country’s exchange rate artificially low will curb import spending and promote export spending, thus increasing AD. What are the drawbacks to this expansionary policy?
1
Expert's answer
2016-12-07T08:08:08-0500
The possible drawback to this expansionary policy is the rise in the price level and the rate of inflation as a result of increase in AD.

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