In a Small Open Economy with Perfect Capital Mobility, a Reduction

question 133

Multiple Choice

In a small open economy with perfect capital mobility, a reduction in the government's budget deficit ______ net exports and the real exchange rate ______.

• A) increases; appreciates
• B) increases; depreciates
• C) decreases; appreciates
• D) decreases; depreciates

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Definitions:

Open Innovation

Practices and processes that encourage the use of external as well as internal ideas and internal as well as external collaboration when conceiving, producing, and marketing new products and services.

External Ideas

Concepts or innovations that originate outside an organization, which can be adopted and implemented to improve business operations or products.

Internal Ideas

Concepts or solutions that originate within an organization, often through its employees or internal research and development activities.

Consumer Packaged Goods

Products that are sold in packaging and consumed by the average consumer at a relatively fast pace, such as food, beverages, and toiletries.