8. Problems and Applications Q3The chapter notes that the rise in the U.S. trade deficit during the 1980s was due largely to the rise in the U.S. budget deficit. On the other hand,some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreignproducts.Assume that U.S. products did decline in relative quality during the 1980s.This caused net exports at any given exchange rate to decreaseIndicate the effect of this shift in et exports on the U.S. market for foreign exchange.Supply4Quantity of DollarsReal Exchange RateThe real exchange rate declines.Net capital outflow is unchanged.TrueDThere is no change in the real interest rate.There is no change in the trade balance.O False1According to this model, which of the following statements are true as a result of the quality change? Check all that apply.D2TrueFalseDemandTrue or False: The claim that some people made in the popular press is consistent with the model in this chapter.Supply?True or False: The change in the real exchange rate that resulted from the decline in the quality of U.S. products may increase the U.S. standard ofliving.

8. Problems and Applications Q3 The chapter notes that the rise in the U.S. trade deficit during the 1980s was due largely to the rise in the U.S. budget deficit. On the other hand, some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreign products. Assume that U.S. products did decline in relative quality during the 1980s. This caused net exports at any given exchange rate to decrease Indicate the effect of this shift in net exports on the U.S. market for foreign exchange. Real Exchange Rate O True Supply O False Quantity of Dollars The real exchange rate declines. ✔Net capital outflow is unchanged. ✔There is no change in the real interest rate. There is no change in the trade balance. D₁ O True D₂ According to this model, which of the following statements are true as a result of the quality change? Check all that apply. O False Demand True or False: The claim that some people made in the popular press is consistent with the model in this chapter. Supply ? True or False: The change in the real exchange rate that resulted from the decline in the quality of U.S. products may increase the U.S. standard of living.

8. Problems and Applications Q3 The chapter notes that the rise in the U.S. trade deficit during the 1980s was due largely to the rise in the U.S. budget deficit. On the other hand, some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreign products. Assume that U.S. products did decline in relative quality during the 1980s. This caused net exports at any given exchange rate to decrease Indicate the effect of this shift in net exports on the U.S. market for foreign exchange. Real Exchange Rate O True Supply O False Quantity of Dollars The real exchange rate declines. ✔Net capital outflow is unchanged. ✔There is no change in the real interest rate. There is no change in the trade balance. D₁ O True D₂ According to this model, which of the following statements are true as a result of the quality change? Check all that apply. O False Demand True or False: The claim that some people made in the popular press is consistent with the model in this chapter. Supply ? True or False: The change in the real exchange rate that resulted from the decline in the quality of U.S. products may increase the U.S. standard of living.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter32: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 3PA

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Question

8. Problems and Applications Q3
The chapter notes that the rise in the U.S. trade deficit during the 1980s was due largely to the rise in the U.S. budget deficit. On the other hand,
some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreign
products.
Assume that U.S. products did decline in relative quality during the 1980s.
This caused net exports at any given exchange rate to decrease
Indicate the effect of this shift in et exports on the U.S. market for foreign exchange.
Supply
4
Quantity of Dollars
Real Exchange Rate
The real exchange rate declines.
Net capital outflow is unchanged.
True
D
There is no change in the real interest rate.
There is no change in the trade balance.
O False
1
According to this model, which of the following statements are true as a result of the quality change? Check all that apply.
D2
True
False
Demand
True or False: The claim that some people made in the popular press is consistent with the model in this chapter.
Supply
?
True or False: The change in the real exchange rate that resulted from the decline in the quality of U.S. products may increase the U.S. standard of
living.

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