Refer to the Figure 13-2. If the economy were initially in equilibrium at r0 and E0 and the government removed import quotas, what would happen to the exchange rate? a. It would appreciate to El. b. It would appreciate to E2. C. It would depreciate to El. d. It would depreciate to E2.

Refer to the Figure 13-2. If the economy were initially in equilibrium at r0 and E0 and the government removed import quotas, what would happen to the exchange rate? a. It would appreciate to El. b. It would appreciate to E2. C. It would depreciate to El. d. It would depreciate to E2.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 12SCQ: If a country is running a government budget surplus, why is (T - G) on the left side of the...

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Question

Figure 13-2
Real
Interest
Rate
World interest
rate, fo
Real
Exchange
Rate
E₁
토
Supply of Loara ble Funds
Demand for
Loa rable Funds
Quantity of Loanable Funds
Supply of Canadian
Dollars (S-1)
Do
Quantity of Dollars
Refer to the Figure 13-2. If the economy were initially in equilibrium at r0 and EO and the government removed import quotas, what
would happen to the exchange rate?
a. It would appreciate to El.
b. It would appreciate to E2.
C. It would depreciate to El.
d. It would depreciate to E2.

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