Author Question: In the case of purely flexible exchange rates, a decrease in domestic real income, with constant ... (Read 69 times)

TVarnum · **on:** Jun 30, 2018

In the case of purely flexible exchange rates, a decrease in domestic real income, with constant prices and domestic credit, will lead to

A) an increase in international reserves.
B) the depreciation of the domestic currency.
C) the appreciation of the domestic currency.
D) no change in the value of the domestic currency.

Question 2

In general, which of the following do NOT tend to increase trade between two countries?

A) linguistic and/or cultural affinity
B) historical ties
C) larger economies
D) mutual membership in preferential trade agreements
E) the existence of well controlled borders between countries