How does an increase in a country's exchange rate affect its ...

[aabwk4]

How does an increase in a country's exchange rate affect its balance of trade?
 
  A) An increase in the exchange rate raises imports, reduces exports, and reduces the balance of trade.
  B) An increase in the exchange rate reduces imports, raises exports, and increases the balance of trade.
  C) An increase in the exchange rate raises imports, reduces exports, and increases the balance of trade.
  D) An increase in the exchange rate reduces imports, raises exports, and reduces the balance of trade.

Question 2

What functions does capital income serve in the economy?
 
  What will be an ideal response?

[Alyson.hiatt@yahoo.com]

Answer to Question 1

A

Answer to Question 2

Interest serves as an incentive to postpone gratification. Profit serves as a reward for innovation and risk taking.

[aabwk4]

Excellent

[mohan]

TYSM