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:

Pumpkins

Fruits from the squash family, typically round with a smooth, slightly ribbed skin, and deep yellow to orange color, often associated with Halloween and autumn.

Cigarette Taxes

A tax levied on cigarettes to increase their price and decrease their consumption for health policy reasons.

Demand for Cigarettes

refers to the total quantity of cigarettes that consumers are willing and able to purchase at a given price level over a specific period of time.

Elastic

A characteristic of a good or service that indicates a high sensitivity of quantity demanded or supplied to changes in its price.