If a country is running a current account deficit year after year, what should we expect to happen to the exchange rate for that country? Explain.
What will be an ideal response?
A country running a current account deficit is exporting less than it is importing. This cannot go on forever; in fact, the exchange rate should adjust to move the current account towards a balance. A country with a current account deficit should see its exchange rate decrease (its currency depreciates). The depreciating currency will make imports less attractive and exports more attractive, eventually decreasing the current account deficit.
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A) shifts; shifts B) shifts; does not shift C) does not shift; shifts D) does not shift; does not shift
Total physical product shows what happens to the quantity of an output when the firm changes the quantity of an input
a. True b. False Indicate whether the statement is true or false
If the price of garbage removal rises, people will
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Based on the simplified trade relations assumed in the textbook, if two countries specialize according to comparative advantage, and trade according to mutually satisfactory terms of trade, then each country's consumption-possibilities frontier will shift inward relative to autarky
Indicate whether the statement is true or false