In the Basic Model of a Small Open Economy,if Consumer

question 64

Multiple Choice

In the basic model of a small open economy,if consumer confidence falls and consumers decide to save more,then the real exchange rate:

• A) rises and net exports fall.
• B) and net exports both rise.
• C) falls and net exports rise.
• D) and net exports both fall.

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Definitions:

Fair Value Method

An accounting approach used to assess and report the value of certain assets and liabilities at their current market prices.

Cost Method

An accounting approach used to value inventory or investments based on the original purchase cost, without adjusting for market changes.

Foreign Exchange Rates

The value at which one currency can be exchanged for another.

Political Conditions

The current state of the government and political climate that can affect economic and business environments.