Imposing an Import Quota Causes the Domestic Real Exchange Rate

question 32

Multiple Choice

Imposing an import quota causes the domestic real exchange rate to

• A)appreciate,which increases foreign demand for domestic goods.
• B)appreciate,which decreases foreign demand for domestic goods.
• C)depreciate,which increases foreign demand for domestic goods.
• D)depreciate,which decreases foreign demand for domestic goods.

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Definitions:

International Trade Agreement

A treaty or contract between countries that governs the exchange of goods, services, and investment across borders.

United States

A country located in North America, comprising 50 states and known for its significant influence on global economics, politics, and culture.

Canada

Canada is a North American country stretching from the U.S. in the south to the Arctic Circle in the north, known for its vast, natural landscapes, multicultural cities, and bilingual population (English and French).

Mexico

A country located in the southern portion of North America, known for its rich cultural heritage, diverse landscapes, and as an important emerging market.