Author Question: A country's budget constraint states that A) the value of exports must be equal to the value of ... (Read 25 times)

laurencescou · **on:** Jun 30, 2018

A country's budget constraint states that

A) the value of exports must be equal to the value of imports.
B) real income in the exporting country must be equal to real income in the importing country.
C) unless a country engages in trade, the value of exports cannot exceed the value of goods produced.
D) a country will engage in trade only if the value of imports exceed the value of exports.
E) a country will engage in trade only if the value of exports exceeds the value of imports.

Question 2

Assuming that the value effect dominates, the current account will increase if

A) the real exchange rate decreases.
B) the real exchange rate increases.
C) disposable income increases.
D) exports fall.
E) domestic prices fall.