Answered: Under a flexible exchange rate regime,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Under a flexible exchange rate regime, if a foreign trading partner goes into recession

a. the nominal exchange rate falls and the RER falls, increasing demand for tradeable goods, reducing the balance of trade and reducing demand for domestic goods and services

b. the nominal exchange rate rises, which increases net exports and improves the trade balance

c.the nominal exchange rate rises and the RER rises, improving the balance of trade and boosting demand for domestic goods and services

d. None of the available answers are relevant

Definition Definition Difference in value of a country's net exports and net imports for goods and services in a given period. A positive balance of trade is called a surplus and coincides with more net cash inflows into a country; a negative balance of trade deficit is a deficit and results in net cash outflows. A balance of trade surplus or deficit doesn't necessarily indicate a positive or negative situation for a country.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions