All Else Equal, Net Exports of a Country Will Increase

question 77

Multiple Choice

All else equal, net exports of a country will increase the most if

• A)its inflation rate decreases and its exchange rate depreciates.
• B)its inflation rate increases and its exchange rate appreciates.
• C)its inflation rate decreases and its exchange rate appreciates.
• D)its inflation rate increases and its exchange rate depreciates.
• E)both its inflation rate and exchange rate remain the same.

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Definitions:

Marginal Product

The additional output that is produced by employing one more unit of a particular input, holding other inputs constant.

Market Price

The current price at which an asset or service can be bought or sold.

Profit-Maximizing

A strategic goal of businesses to achieve the highest possible profit through adjusting production levels, pricing strategies, and cost management.

Final Good

A good that is intended for final use by the consumer, distinct from intermediate goods which are used in producing other goods.