15 Questions
What happens to imports when the exchange rate appreciates?
Imports decrease because foreign goods become more expensive.
What is the effect of an increase in the price of foreign goods relative to domestic goods on exports?
Exports increase.
How does a decrease in world demand affect exports?
Exports decrease.
How does a depreciating exchange rate affect the competitiveness of domestic products?
It improves the competitiveness of domestic products.
What happens to imports when the price of foreign goods increases relative to domestic goods?
Imports decrease.
In the open-economy macroeconomics, what happens to imports when the price of the foreign good decreases relative to the price of the domestic good?
Imports increase due to the relative cheaper domestic goods.
What is the effect of a decrease in real GDP on imports in an open economy?
Imports decrease as there is lower demand for both domestic and foreign goods.
How does an appreciating exchange rate affect the competitiveness of domestic products in the international market?
Domestic products become relatively more expensive, reducing their competitiveness.
What happens to exports when the price of foreign goods decreases relative to domestic goods?
Exports increase as foreign goods become relatively cheaper.
How does a decrease in world demand affect exports in an open economy?
Exports decrease due to lower demand for both domestic and foreign goods.
In an open economy, what is the effect of a decrease in the price of foreign goods relative to domestic goods on exports?
Exports increase due to increased demand for domestic goods.
How does an increase in the price of foreign goods relative to domestic goods affect imports in an open economy?
Imports decrease due to decreased demand for domestic goods.
What happens to imports when the exchange rate appreciates in an open economy?
Imports decrease as foreign goods become relatively more expensive.
How does a depreciating exchange rate affect the competitiveness of domestic products in the international market?
Domestic products become more competitive due to decreased prices in the international market.
What is the effect of a decrease in real GDP on imports in an open economy?
Imports decrease due to decreased demand for domestic goods.
Test your knowledge on open-economy macroeconomics with this quiz. Learn about output determination in the short run using the expenditure diagram and the determinants of imports such as the level of real GDP, prices of foreign goods, and exchange rates.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
