If New Yorkers decrease their purchases of French champagne, assuming all else remains constant, this will ________ of the United States.
A) increase the trade deficit
B) decrease the current account balance
C) increase the balance of trade
D) decrease net exports
E) increase the balance of payments
Question 2
How will the exchange rate (foreign currency per dollar) respond to an increase in the relative rate of productivity growth in the United States in the long run?
A) Exchange rates will rise.
B) Exchange rates will be unaffected by changes in the relative rate of productivity growth in the United States, both in the short run and in the long run.
C) The exchange rate will be affected in the short run, but not in the long run.
D) Exchange rates will fall.
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