In a Small Open Economy, If Consumers Shift Their Preference

question 56

Multiple Choice

In a small open economy, if consumers shift their preference toward Japanese cars, then net exports:

• A)fall, and the real exchange rate falls.
• B)fall, but the real exchange rate remains unchanged.
• C)remain unchanged, but the real exchange rate falls.
• D)increase, and the real exchange rate remains unchanged.

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Definitions:

Qualifying Child

A dependent who meets specific IRS criteria related to age, relationship, residency, support, and filing status for potential tax benefits.

Head of Household

A tax filing status for individuals living in the U.S. who are unmarried and support a qualifying person, offering more favorable tax rates and deductions.

Adjusted Gross Income (AGI)

A measure of income calculated from your gross income and used to determine how much of your income is taxable.

Standard Deduction

A fixed amount that taxpayers can subtract from their income before income tax is applied, reducing the taxable income, and which varies based on filing status.