The concept of 'Pass-Through' of exchange-rate changes refers to:
A. Only the effect on output
B. Only the effect on interest rates
C. The complete absence of price adjustment
D. The extent to which changes in the nominal exchange rate are reflected in domestic prices of traded goods
Answer: Option D
Solution (By JKSSB Mock Tests)
Exchange-rate pass-through measures the degree to which a change in the nominal exchange rate is transmitted to import prices and ultimately to consumer prices in the domestic economy.
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