In the Market for Foreign-Currency Exchange in the Open-Economy Macroeconomic

question 179

Multiple Choice

In the market for foreign-currency exchange in the open-economy macroeconomic model, which of the following results from a higher real exchange rate?

• A) It makes Canadian goods more expensive relative to foreign goods and reduces the quantity of dollars supplied.
• B) It makes Canadian goods more expensive relative to foreign goods and reduces the quantity of dollars demanded.
• C) It makes foreign goods more expensive relative to Canadian goods and reduces the quantity of dollars supplied.
• D) It makes foreign goods more expensive relative to Canadian goods and reduces the quantity of dollars demanded.

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Definitions:

Diverse Factors

A variety of elements or conditions that contribute to the complexity or outcome of a situation.

Surrounding Society

The social environment and community that envelops an individual or group, influencing their behaviors and beliefs.

Disabilities

Physical or mental conditions that limit a person's movements, senses, or activities.

Cultural Influences

The impact of culture on the values, behaviors, and practices of individuals and societies.