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.

---

Definitions:

Balance of Loan

The remaining amount owed on a debt after periodic repayments have been made.

Financing

The process of providing funds for business activities, making purchases, or investing, through various means such as loans, credit, or investment.

Previously Owned

Refers to items or assets that have been owned by another party before the current owner.

Loan Payment

The act of paying back a borrowed sum of money to a lender, typically including both principal and interest components.