In a Small Open Economy, When Foreign Governments Reduce National

question 67

Multiple Choice

In a small open economy, when foreign governments reduce national saving in their countries, the equilibrium real exchange rate (measured in units of the home currency divided by units of foreign currency) :

• A)rises, and home country net exports fall.
• B)rises, and home country net exports rise.
• C)falls, and home country net exports fall.
• D)falls, and home country net exports rise.

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Definitions:

Deadlocked Directors

A situation in a board of directors where members are evenly divided on an issue, preventing a decision from being made.

Irreparable Injury

Harm that cannot be adequately remedied or compensated by monetary damages, thus potentially justifying injunctive relief.

Appraisal Remedies

Legal remedies that allow shareholders to receive a fair valuation and compensation for their shares, typically in cases of mergers or acquisitions.

Fair Value

A financial accounting term referring to the estimated market value of an asset or liability based on current market prices.