When the Real Exchange Rate Rises,what Happens to Net Exports

question 100

Essay

When the real exchange rate rises,what happens to net exports in the short run? In the long run? What explains the difference between the short-run effect and the long-run effect?

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Definitions:

Accommodation

In cognitive psychology, the process by which individuals adjust their schemas to incorporate new information.

Equilibrium

A state of balance or stability within a system, where all forces acting on the system are canceled out by each other.

Sex-limited

Traits or characteristics that are expressed in only one sex, even though the genes for these traits might exist in both sexes.

Sex-linked

Referring to traits genetically determined by genes located on sex chromosomes.