If There a Country's Imports Exceed in Value Its Exports,the

question 3

Multiple Choice

If there a country's imports exceed in value its exports,the domestic currency depreciates and trade adjustments start taking place.Under this scenario how does the employment of resources affect the amount of currency depreciation required to shift domestic resources to the production of more exports and import substitutes?

• A)The greater the employment of resources (i.e.a lower unemployment rate)the greater the depreciation of the nation's currency is needed
• B)The greater the employment of resources the less depreciation of the nation's currency is needed
• C)The size of the employment of resources has relatively little influence on the amount of currency depreciation needed,as there is a loose relation between the two
• D)The employment of resources only plays a role for the large economies and has no influence for smaller economies

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Definitions:

Money Prices

The cost of goods and services as expressed in monetary units, reflecting the amount of money needed to purchase them.

Cost-Push Inflation

A sustained rise in the price level caused by a leftward shift of the aggregate supply curve.

Major Wars

Large-scale, high-intensity conflicts between countries or significant groups, often with substantial impacts on societies, economies, and environments.

Deflation

A decrease in the general price level of goods and services in an economy over a period, often indicating reduced consumer demand or excessive supply.