Suppose There Is a Real Exchange Rate Appreciation

question 4

Multiple Choice

Suppose there is a real exchange rate appreciation. This real appreciation is more likely to cause a decrease in net exports when:

• A) foreign output is relatively high.
• B) imports are not at all sensitive to price changes.
• C) exports and imports are relatively sensitive to price changes.
• D) domestic output is relatively low.
• E) the Marshall- Lerner condition does not hold.

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Definitions:

Significance Level

The significance level, often denoted by alpha (α), is the threshold chosen by the researcher to determine the statistical significance of an outcome; it's the probability of rejecting the null hypothesis when it is true.

Highly Significant

A term used in statistical analysis to denote results that vastly exceed the threshold for statistical significance, often suggesting a strong effect or association.

p < .001

p < .001 indicates that the probability of the observed data, or something more extreme, assuming the null hypothesis is true, is less than 0.1%, which is considered highly statistically significant.

Within-group Variability

The measure of how much individual observations in a single group differ from each other in a dataset.