If the USHas a Trade Deficit and the Nominal Exchange Rate Depreciates,then

question 35

Multiple Choice

If the U.S.has a trade deficit and the nominal exchange rate depreciates,then other things the same

• A)the trade deficit rises and net capital outflow rises.
• B)the trade deficit rises and net capital outflow falls.
• C)the trade deficit falls and net capital outflows rise.
• D)the trade deficit falls and net capital outflows fall.

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Definitions:

Production Process

is the series of steps or operations involved in the manufacture of goods or services.

Short-Run Adjustments

Refers to the changes firms make in response to changing market conditions in the short term when at least one production factor is fixed.

Oligopolists

Firms that are part of an oligopoly, a market structure with a small number of firms dominating the market, leading to limited competition.

Inverted-U Theory

A theoretical concept suggesting that a variable's effect on a particular outcome increases to a point but then begins to decrease as the variable continues to increase.