In an open economy under flexible exchange rates, a reduction in the interest rate will cause a reduction in which of the following?
A) investment
B) the exchange rate, E
C) net exports
D) all of the above
E) none of the above
B
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An import quota specifies
A) the amount of funds that can be paid for any imported good. B) the amount of taxes that must be paid on any imported good. C) the maximum amount of an item that may be imported during a specified period. D) the minimum amount of an item that may be imported during a specified period.
The balance of payments ____
a. b and e b. is always zero c. with some nations is different than it is with others d. is negative when the nation runs a trade deficit e. can only be expanded when the government has foreign exchange reserves
The aggregate demand curve sloping downward can be explained in part through:
A. the wealth effect. B. the negative relationship between the price level and government spending. C. the positive relationship between the price level and net exports. D. All of these are true.
The supply curve of books (which are produced using paper made from trees) will shift to the left in response to: a. a decline in college tuition
b. a sharp increase in the demand for and construction of wood-frame homes. c. an increase in the supply of lumberjacks. d. an end to government regulations that limit timber harvesting in national forests.