In a Small Open Economy with a Floating Exchange Rate

question 31

Multiple Choice

In a small open economy with a floating exchange rate, if the government imposes an import quota, then in the new short-run equilibrium the IS* curve shifts to the right, raising the exchange rate:

• A)but not raising net exports or income.
• B)and net exports but not income.
• C)and income but not net exports.
• D)net exports and income.

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Definitions:

Identity Foreclosure

A stage of identity development in which an individual has prematurely committed to an identity without adequate exploration of other options.

Identity Disorder

A psychological condition where an individual experiences confusion or dissonance regarding their personal identity, which can affect their sense of self and overall well-being.

Erik Erikson

A developmental psychologist known for his theory on the psychosocial development of humans, outlining eight stages from infancy to adulthood.

Core Identity

The fundamental sense of who one is, encompassing self-image, individuality, and personality traits.