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Question: The Brazilian real devalued by approximately 40% in 1999. Assume that Brazil's largest trading partner is Argentina. What effect would this eventually have on the Argentine peso even if that country had a balanced budget, a currency tied to the dollar and backed by gold, and no excessive growth in the money supply? Why did it take three years for the value of the Argentine peso to collapse?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M93115074

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