How Does an Increase in the Relative Price of a Country's

question 55

Multiple Choice

How does an increase in the relative price of a country's goods in terms of foreign goods,or real exchange rate,affect its balance of trade?

• A)An increase in the real exchange rate raises imports,reduces exports,and reduces the balance of trade.
• B)An increase in the real exchange rate reduces imports,raises exports,and reduces the balance of trade.
• C)An increase in the real exchange rate reduces imports,raises exports,and increases the balance of trade.
• D)An increase in the real exchange rate raises imports,reduces exports,and increases the balance of trade.

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Definitions:

Exosystem

A concept in ecological systems theory referring to the larger social systems that indirectly influence an individual, such as community structures or governmental policies.

Mesosystem

In ecological systems theory, the mesosystem refers to the interactions between different microsystems, like the relationship between a child's home and school environment.

Macrosystem

The largest and most remote set of people and places to a person that still exercises a significant influence on them, according to ecological systems theory.

Exosystem

A term in ecological systems theory referring to the social settings that indirectly influence an individual's development, such as parental workplaces.