Hh.85. In a small open economy model, when every foreign country reduces government spending in their economies, theequilibrium real exchange rate (e):TIP: draw the plot (with net exports and net capital outflows) and move the appropriate line.O rises, and home country net exports fall.O rises, and home country net exports rise.O falls, and home country net exports fall.O falls, and home country net exports rise.Policies that Influence Real Exchange RateRealexchangerate, <Realexchangerate,O (A)(B)(C)S₁-1 S₂-1O (D)NX, NX.(C)S-1₂ S-1₁NXNet exports(B)exchangerate, < S-16) S-16)XNXNXNX Net exportsNX₂NX₁Net exportsNK, NK,Which of the figures displays the impact of protectionist trade policies on the real exchange rate?NXNet exportsRealRealexchangerate,S-1(D)NX1

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In a small open economy model, when every foreign country reduces government spending in their economies, the equilibrium real exchange rate (e): TIP: draw the plot (with net exports and net capital outflows) and move the appropriate line. O rises, and home country net exports fall. O rises, and home country net exports rise. O falls, and home country net exports fall.

In a small open economy model, when every foreign country reduces government spending in their economies, the equilibrium real exchange rate (e): TIP: draw the plot (with net exports and net capital outflows) and move the appropriate line. O rises, and home country net exports fall. O rises, and home country net exports rise. O falls, and home country net exports fall.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter19: International Finance And The Foreign Exchange Market

Section: Chapter Questions

Problem 5CQ

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