Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![A senator renounces his past support for protectionism: "The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. If
we subsidae US. exports instead, we can reduce the deficit by increasing our competitiveness.
Shew the effect of an export subsidy on the market for foreign exchange
Demand
Bupply
benand
Quantiy of Dotars
Quantity of Dollars
True or False: The U.S. real exchange rate depreciates as a result of this export subsidy.
O True
O False
The export subsidy leads to
in the trade deficit.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F49bec9c5-ad72-42a5-bdda-b1aecf1812a5%2F667d8dfa-d643-48ad-ab13-591d4bdab7d6%2Fp0hek5v_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A senator renounces his past support for protectionism: "The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. If
we subsidae US. exports instead, we can reduce the deficit by increasing our competitiveness.
Shew the effect of an export subsidy on the market for foreign exchange
Demand
Bupply
benand
Quantiy of Dotars
Quantity of Dollars
True or False: The U.S. real exchange rate depreciates as a result of this export subsidy.
O True
O False
The export subsidy leads to
in the trade deficit.
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