According to the Mundell-Fleming Model, Import Restrictions in an Economy

question 7

Multiple Choice

According to the Mundell-Fleming model, import restrictions in an economy with flexible exchange rates cause net exports to ______ and in an economy with fixed exchange rates import restrictions cause net exports to ______.

• A) increase; increase
• B) increase; remain unchanged
• C) remain unchanged; remain unchanged
• D) remain unchanged; increase

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Definitions:

Goodwill

An intangible asset representing the excess of the purchase price over the fair market value of an acquired company's identifiable net assets, reflecting the value of its brand, customer relationships, and other non-physical assets.

Fair Value

The amount one would expect to obtain from selling an asset or the cost to transfer a liability in a smooth transaction among market players as of the valuation date.