17. Suppose that the Cuban economy is a closed one (ie X = M = 0). In 2016, the US government relaxed travel and trade restrictions with Cuba, allowing Cuba to trade with the US. Cuba starts importing consumption goods and exporting domestic produce to the US but it incurs a trade deficit as it is not as competitive as the US economy. As such, the Cuban economy's AE line__and its slope become . A. does not shift; steeper shifts up; flatter C. shifts down; flatter D. shifts up; steeper E. none of the above

17. Suppose that the Cuban economy is a closed one (ie X = M = 0). In 2016, the US government relaxed travel and trade restrictions with Cuba, allowing Cuba to trade with the US. Cuba starts importing consumption goods and exporting domestic produce to the US but it incurs a trade deficit as it is not as competitive as the US economy. As such, the Cuban economy's AE line__and its slope become . A. does not shift; steeper shifts up; flatter C. shifts down; flatter D. shifts up; steeper E. none of the above

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter20: Exchange Rates And The Macroeconomy

Section: Chapter Questions

Problem 3TY

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