The Country of Aquilonia Is Politically Very Stable and Has

question 153

Multiple Choice

The country of Aquilonia is politically very stable and has a long tradition of respecting property rights. If several other countries suddenly became politically unstable, which of the following would happen?

• A)Aquilonia's real interest rate would rise.
• B)Aquilonia's real exchange rate would fall.
• C)Aquilonia's net exports would fall.
• D)Aquilonia's net exports would not change.