The Equilibrium Real Exchange Rate Will Rise

question 99

Multiple Choice

The equilibrium real exchange rate will rise

• A)if there is a rise in domestic income.
• B)if there is a rise in foreign interest rates.
• C)if there is a rise in foreign income.
• D)if there is a shift in demand away from the home good.

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Definitions:

Import

The process of importing products or services from foreign countries for the purpose of selling them domestically.

Domestic

Pertaining to or occurring within a country’s borders, often in reference to products produced, services rendered, or economic activities.

Produce

To create, manufacture, or grow goods and services for sale or consumption.

Import Quotas

Limits set by a government on the amount or value of goods that can be imported into a country.