Which of the Following Would Decrease the Real Exchange Rate

question 33

Multiple Choice

Which of the following would decrease the real exchange rate in a small open economy in the long run?

• A)a personal income tax cut
• B)a reduction in government spending
• C)a tariff on imports
• D)an increase in investment
• Exhibit: Policies Influence Real Exchange Rate

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Definitions:

New Deal

A series of programs, public work projects, and financial reforms and regulations enacted by President Franklin D. Roosevelt in the United States during the 1930s to help recover from the Great Depression.

Franklin Roosevelt

The 32nd President of the United States, who led the country during the Great Depression and World War II, known for his New Deal policies.

Suburbanization

The process of population movement from within cities to residential areas on the outskirts, leading to the expansion of suburban areas.

Foreign Oil

Oil that is sourced from countries other than one's own, usually referring to the importation of crude oil or petroleum products.