Which of the Following Events Will Tend to Increase Net

question 107

Multiple Choice

Which of the following events will tend to increase net exports of the United States?

• A) an appreciation of the dollar
• B) an increase in the U.S. real interest rate
• C) a fall in the real interest rate in several western European countries
• D) None of the above

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Definitions:

Real Exchange Rate

The price of one country's currency in terms of another currency, adjusted for inflation, which reflects the purchasing power between the two countries.

Surplus

The situation in which the quantity of a good or service supplied is more than the quantity demanded.

Import Quotas

Restrictions set by a government on the quantity of goods that can be imported into a country.

Net Exports

The value of a country's total exports minus its total imports, representing the net effect of foreign trade on an economy.