Figure 32-5 Refer to the Following Diagram of the Open-Economy Macroeconomic Model

question 71

Multiple Choice

Figure 32-5
Refer to the following diagram of the open-economy macroeconomic model to answer the questions that follow.
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Graph (a)
Graph (b) Graph (c)
-Refer to Figure 32-5. Suppose that initially the economy is in equilibrium at r₁ (point d) and e₃ (point i) . If the government removes import quotas, the exchange rate will move to

• A)e₅.
• B)e₄.
• C)e₂.
• D)e₁.

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Definitions:

Planning Budget

A financial plan that outlines the expected revenues, expenses, and goals of an organization for a specific period.

Other Expenses

Costs not directly related to the production of goods or services, such as interest payments or losses from asset sales.

Activity Variance

The difference between the budgeted amount of activity and the actual amount of activity, often analyzed in budgeting and costing practices.

Selling

The act of transferring ownership of a product or service from one entity to another in exchange for money, goods, services, or other forms of value.