Author Question: For this question, assume that the J-curve effect exists. Which of the following will occur after a ... (Read 13 times)

SO00 · **on:** Jun 30, 2018

For this question, assume that the J-curve effect exists. Which of the following will occur after a real appreciation?

A) The trade deficit will improve temporarily before it worsens.
B) The trade deficit will worsen temporarily before it improves.
C) The real exchange rate will fall temporarily before it rises.
D) The real exchange rate will rise temporarily before it falls.
E) none of the above

Question 2

In the short run, a reduction in the price of oil will cause

A) a reduction in output.
B) an increase in the price level.
C) a reduction in the interest rate.
D) all of the above
E) none of the above