Suppose there is a real appreciation. This real appreciation is ...

[mrsjacobs44]

Suppose there is a real appreciation. This real appreciation is more likely to cause a reduction in net exports when
 
  A) domestic output is relatively low.
  B) foreign output is relatively high.
  C) the Marshall-Lerner condition does not hold.
  D) imports are not at all sensitive to price changes.
  E) exports and imports are relatively sensitive to price changes.

Question 2

If the output is too low, to achieve the medium run equilibrium, the central bank will
 
  A) increases policy rate.
  B) reduces policy rate.
  C) increase money supply.
  D) increases inflation rate.

[emily12345]

Answer to Question 1

E

Answer to Question 2

B

[mrsjacobs44]

Excellent

[scottmt]

TYSM