In a Small Open Economy, If the Government Adopts a Policy

question 106

Multiple Choice

In a small open economy, if the government adopts a policy that lowers imports, then that policy:

• A) raises the real exchange rate and increases net exports.
• B) raises the real exchange rate and does not change net exports.
• C) raises the real exchange rate and decreases net exports.
• D) lowers the real exchange rate.

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Definitions:

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