In a Large Open Economy, If an Import Quota Is

question 82

Multiple Choice

In a large open economy, if an import quota is adopted, then:

• A) net exports remain unchanged, as imports and exports decrease by equal amounts, while the real exchange rate rises.
• B) net exports remain unchanged, as imports and exports decrease by equal amounts, while the real exchange rate falls.
• C) net exports rise and the real exchange rate rises.
• D) net exports rise and the real exchange rate falls.

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