The J curve implies that a real depreciation will cause
A. the nominal exchange rate to depreciate in the short run and appreciate in the long run.
B. net exports to fall in the short run and rise in the long run.
C. net exports to rise in the short run and fall in the long run.
D. the nominal exchange rate to appreciate in the short run and depreciate in the long run.
Answer: B
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The above figure shows the cost curves for a competitive firm. The firm will incur economic losses if the price is less than
A) $0. B) $5. C) $10. D) $11.
An arbitrageur in foreign exchange is a person who
a. buys foreign currency, hoping to profit by selling it at a higher exchange rate at some later date b. earns illegal profit by manipulating foreign exchange c. causes differences in exchange rates in different geographic markets d. simultaneously buys large amounts of a currency in one market and sells it in another market e. mediates disputes when there is no agreement on exchange rates in international currency markets
A major difference between a tariff and a quota is that a tariff:
a. will reduce imports, but a quota generally will not. b. can easily be rescinded, but a quota cannot. c. will reduce the ability of foreigners to obtain the purchasing power to buy a nation's export goods, but a quota will not affect the foreign demand for the nation's exports. d. typically generates tax revenue, while a quota does not.