The Introduction of a Stylish New Line of Toyotas, Which

question 85

Multiple Choice

The introduction of a stylish new line of Toyotas, which makes some consumers prefer foreign cars over domestic cars, will, according to the Mundell-Fleming model with floating exchange rates, lead to:

• A) a fall in income and net exports.
• B) no change in income or net exports.
• C) a fall in income but no change in net exports.
• D) no change in income but a fall in net exports.

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