In the Market for Foreign-Currency Exchange in the Open-Economy Macroeconomic

question 179

Multiple Choice

In the market for foreign-currency exchange in the open-economy macroeconomic model, which of the following results from a higher real exchange rate?

• A) It makes Canadian goods more expensive relative to foreign goods and reduces the quantity of dollars supplied.
• B) It makes Canadian goods more expensive relative to foreign goods and reduces the quantity of dollars demanded.
• C) It makes foreign goods more expensive relative to Canadian goods and reduces the quantity of dollars supplied.
• D) It makes foreign goods more expensive relative to Canadian goods and reduces the quantity of dollars demanded.

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Definitions:

Electromagnetic Spectrum

The range of all types of electromagnetic radiation, from gamma rays to radio waves, including visible light.

Gamma Rays

High-frequency electromagnetic waves emitted by atomic nuclei during radioactive decay, possessing high energy capable of penetrating most materials.

Electromagnetic Radiation

A form of energy that is all around us and takes various forms, such as radio waves, microwaves, X-rays, and gamma rays, all traveling at the speed of light.

Optic Nerve

A pair of nerves transmitting visual information from the retina to the brain.