If the Exchange Rate Has Been $2

question 3

Multiple Choice

If the exchange rate has been $2.00 per British pound but now falls to $1.60 per British pound, there will be

• A) more U.S. imports from Great Britain because the price of pounds has fallen.
• B) more exports to Great Britain because the price of pounds has risen.
• C) fewer exports to Great Britain because the price of the pound has risen.
• D) more U.S. exports to Great Britain since the price of the dollar has fallen.
• E) no change in either exports or imports.

---

Definitions:

Net Exports

The value of a country's total exports minus its total imports; a measure of a nation's foreign trade balance.

Net Capital Outflow

The financial discrepancy between home country residents' investments in foreign lands and foreign investors' stakes in domestic assets.

U.S. Net Capital Outflow

The difference between the purchase of foreign assets by residents of the United States and the purchase of U.S. assets by foreigners.

Foreign Assets

Assets such as securities, properties, and bank accounts held by a country's residents or the government in foreign countries.