3. If a rise in trade deficit results from a decrease in the quality of your country's products. a. How would this affect net exports at any given exchange rate? b. Use a three-panel diagram to show the effect of this shift in net exports on the real exchange rate and trade balance. c. Does a decline in the quality of your country's products have any effect on your standard of living? Give a clear elaboration with example or graphs or facts (Hint: When you sell goods to foreigners, what do you receive in return?)

3. If a rise in trade deficit results from a decrease in the quality of your country's products. a. How would this affect net exports at any given exchange rate? b. Use a three-panel diagram to show the effect of this shift in net exports on the real exchange rate and trade balance. c. Does a decline in the quality of your country's products have any effect on your standard of living? Give a clear elaboration with example or graphs or facts (Hint: When you sell goods to foreigners, what do you receive in return?)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

3. If a rise in trade deficit results from a
decrease in the quality of your country's
products.
a. How would this affect net exports at any
given exchange rate?
b. Use a three-panel diagram to show the
effect of this shift in net exports on the real
exchange rate and trade balance.
c. Does a decline in the quality of your
country's products have any effect on your
standard of living? Give a clear elaboration
with example or graphs or facts (Hint: When
you sell goods to foreigners, what do you
receive in return?)

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