If the demand for the goods that we export increases______? Group of answer choices 1The exchange rate is unaffected. 2The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates). 3The exchange rate increases (the US $ appreciates). 4The exchange rate decreases (the US $ depreciates).

ECON MACRO
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ISBN:9781337000529
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Chapter18: International Finance
Section: Chapter Questions
Problem 2.3P
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If the demand for the goods that we export increases______?
Group of answer choices

1The exchange rate is unaffected.

2The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates).

3The exchange rate increases (the US $ appreciates).

4The exchange rate decreases (the US $ depreciates).

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If the demand for the goods that export increases, the exchange rate increases and leads to an appreciation.

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