In a Small Open Economy, When Foreign Governments Reduce National

question 9

Multiple Choice

In a small open economy, when foreign governments reduce national saving in their countries, the equilibrium real exchange rate:

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

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Definitions:

Marine Fossils

Remains of marine organisms that have been preserved in sedimentary rock.

Deformation

The process of change in the shape or size of rocks in response to stress, leading to folding, faulting, or shearing.

Subsidence

The gradual sinking or settling of the Earth's surface, which can result from natural processes such as erosion or human activities like mining.

Uplift

The vertical elevation of the Earth's surface due to natural processes like tectonic movements, leading to mountain building and other geological features.