Economic Equilibrium and Exchange Rate Quiz

• It remains unaffected as domestic disposable income only impacts savings
• It may improve due to increased domestic demand for goods and services (correct)
• It may worsen due to decreased domestic demand for foreign goods
• It may improve due to decreased domestic demand for foreign goods

• It may improve due to increased competitiveness of domestic goods in foreign markets (correct)
• It may improve due to increased demand for foreign goods
• It may worsen due to decreased competitiveness of domestic goods in foreign markets
• It remains unaffected as real exchange rate changes have no impact on trade balance

• Increase in interest rates and potential improvement in trade balance
• Reduction in interest rates and potential improvement in trade balance (correct)
• Increase in interest rates and potential worsening of trade balance
• No impact on interest rates but potential worsening of trade balance

<p>Leads to higher interest rates and currency appreciation (D)</p> Signup and view all the answers

<p>Ratio of domestic cost of foreign goods basket to domestic goods basket (D)</p> Signup and view all the answers