Suppose There Is a Real Appreciation

question 38

Multiple Choice

Suppose there is a real appreciation.This real appreciation is more likely to cause a reduction in net exports when

• A)domestic output is relatively low.
• B)foreign output is relatively high.
• C)the Marshall-Lerner condition does not hold.
• D)imports are not at all sensitive to price changes.
• E) exports and imports are relatively sensitive to price changes.

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Definitions:

Aversion To Risk

Risk aversion is the preference to avoid uncertainty.

Cash Balances

The amount of available cash in a company's accounts at any given time, used to meet short-term obligations.

EOQ Model

An inventory management formula that identifies the optimum order quantity to minimize both ordering and holding costs.

Constant Demand

A condition in which the demand for a product or service remains unchanged over a particular period of time.