In the late 1990s, Brazil decided to reduce the value of its currency, the real, in order to boost exports and help the economy to move out of a recession. Argentina, the main trade competitor of Brazil in various products, was immediately affected by Brazil's decision, since it would:
A. decrease Argentina's imports and decrease Argentina's trade deficit.
B. increase Argentina's exports and decrease Argentina's trade deficit.
C. decrease Argentina's exports and increase Argentina's trade deficit.
D. increase Argentina's imports and decrease Argentina's trade deficit.
Answer: C
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In the above figure, an increase in cost of the cheese used to produce pizza
A) shifts the supply curve from S to S1. B) shifts the supply curve from S to S2. C) results in a movement from point a to point b. D) results in a movement from point b to point a. E) has no effect.
When the Fed buys government bonds on the open market,
A. the market rate of interest on government bonds are lowered AND the market rate of interest on corporate bonds are lowered. B. the market rate of interest on corporate bonds are increased. C. government yields drop but corporate yields rise. D. government and corporate yields rise.
Graphically, consumer surplus is the area:
a. above the equilibrium price and below the demand curve. b. below the equilibrium price and above the supply curve. c. above the equilibrium price and below the supply curve. d. below the equilibrium price and above the demand curve. e. above the equilibrium price and above the supply curve.
In an? economy, the currency drain is 5 percent of deposits and the desired reserve ratio is 2 percent of deposits. If the central bank buys? $100,000 of securities on the open? market, calculate the money multiplier.