If the Government of Colombia Made Policy Changes That Increased

question 280

Multiple Choice

If the government of Colombia made policy changes that increased national saving, the real exchange rate of the peso would

• A)depreciate and Colombian net exports would rise.
• B)depreciate and Colombian net exports would fall.
• C)appreciate and Colombian net exports would rise.
• D)appreciate and Colombian net exports would fall.

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Definitions:

Larger Bequest

Pertains to a greater amount of money or property left to someone in a will, highlighting the concept in inheritance and estate planning.

Marginal Tax-Rate

The rate at which the next dollar of taxable income is taxed.

Substitution Effect

The change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitution.

Income Effect

The change in consumption that results when a price change moves the consumer to a higher or lower indifference curve