Suppose the US exports increase by $50 and imports decrease by $50 in 2019 compare to...
Suppose the US exports increase by $50 and imports decrease by $50 in 2019 compare to 2018. Then which of the following will happen?
a. US net export in 2019 will decrease by $100 in 2019 compare to 2018
b. US net export will remain unchanged in 2019 compare to 2018
c. US net export will increase by $100 in 2019 compare to 2018
With other things being equal, if US prices go up relative to prices in Mexico, the USD appreciates against Mexican Peso.
a. True
b. False
d. None of the above
Homework Answers
Ans.1- US net export will increase by $100 in 2019 compare to 2018
Net export = export-import . exports increase by 50 and imports decrease by 50 . So, net exports increase by 100.
Ans.2-False
if US prices go up relative to prices in Mexico, demand for american goods will fall leading to a fall in the demand for dollars and hence USD will depreciate.
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