Answered

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What is not the correct statement about overshooting?
a) Overshooting takes place due to a change in expected future exchange.
b) Overshooting refers to the observation when there is a shock affecting the foreign exchange market, the spot exchange rate tends to change by more in the short run than in the long run.
c) If the price level is anchored through the use of an exchange rate target, money supply target, or interest rate policy with inflation target, then overshooting can avoided.
d) The asset approach is appropriate to illuminate overshooting

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