Protectionist Policies in a Small Open Economy Do Not Alter

question 94

Multiple Choice

Protectionist policies in a small open economy do not alter the trade balance because the:

• A) quantity of imports and exports is fixed.
• B) interest rate adjusts to offset any reductions in imports.
• C) exchange rate appreciates to offset the increase in net exports.
• D) level of net capital outflow is fixed by the world interest rate.

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Definitions:

Responsible

The state or quality of being accountable or to blame for something, often involving obligations to act ethically and sensibly.

Bystanders

Individuals who are present at an event or incident but do not take part.

Emergency Situation

This refers to an unforeseen and urgent event requiring immediate action, often posing danger or threat to life, property, or environment.

Role Identities

The aspects of an individual's identity formed through their roles in society, such as professional, familial, or social roles.