This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain how does an increase in the real exchange rate affect exports and imports? What will be ... (Read 116 times)

lak

  • Hero Member
  • *****
  • Posts: 546
on: Jun 30, 2018
Explain how does an increase in the real exchange rate affect exports and imports?
 
  What will be an ideal response?

Question 2

Refer to above figure. Given a tariff of 3 per unit, what is the country's consumer surplus?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

tsternbergh47

  • Sr. Member
  • ****
  • Posts: 311
Reply #1 on: Jun 30, 2018
Answer to Question 1

When the real exchange rate increases, domestic products are cheaper relative to foreign products. Due to this, exports increase as foreigners demand more of our exports. The change in imports is ambiguous because fewer units of imports are purchased (the volume effect), but each foreign unit is now more expensive (the value effect). Remember: exports and imports are measured in terms of domestic output, i.e. dollar value, not volume of units. However, we often assume that the volume effect outweighs the value effect, so that imports decrease when the real exchange rate rises.

Answer to Question 2

320


lak

  • Member
  • Posts: 546
Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

olderstudent

  • Member
  • Posts: 339
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

On average, the stomach produces 2 L of hydrochloric acid per day.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

Did you know?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Did you know?

In most cases, kidneys can recover from almost complete loss of function, such as in acute kidney (renal) failure.

Did you know?

Glaucoma is a leading cause of blindness. As of yet, there is no cure. Everyone is at risk, and there may be no warning signs. It is six to eight times more common in African Americans than in whites. The best and most effective way to detect glaucoma is to receive a dilated eye examination.

Bacteria exchange DNA by several processes Bacteria exchange DNA by several processes
C, A nurse can also administer the medication by setting the dose and rate with an electronic infusi C, A nurse can also administer the medication by setting the dose and rate with an electronic infusi
Rate of Growth of Brain Areas Rate of Growth of Brain Areas
Spring force, crankcase pressure, and intake manifold vacuum work together to regulate the flow rate ... Spring force, crankcase pressure, and intake manifold vacuum work together to regulate the flow rate ...
Schematic drawing of a permeation test cell used to measure the permeation rate of chemicals through ... Schematic drawing of a permeation test cell used to measure the permeation rate of chemicals through ...
The same pair of homologs, but with no exchange occurring between them The same pair of homologs, but with no exchange occurring between them
Video: Methods of carbon dioxide transport - carbaminohemoglobin and bicarbonate ions

For a complete list of videos, visit our video library