575 #
© 2014 Pearson Canada Inc.#
Lower tariffs and quotas cause a country's currency to ____ in the ____ run,
everything else held constant.
A) depreciate; short
B) appreciate; short
C) depreciate; long
D) appreciate; long
Answer: C
Diff: 1 Type: MC Page Ref: 475
Skill: Recall
Objective List: 19.2 Identify the factors that lead to changes in the exchange rate in the long run
Anything that increases the demand for foreign goods relative to domestic goods tends to
____ the domestic currency because domestic goods will only continue to sell well if the
value of the domestic currency is ____, everything else held constant.
A) depreciate; lower
B) depreciate; higher
C) appreciate; lower
D) appreciate; higher
Answer: A
Diff: 1 Type: MC Page Ref: 475
Skill: Recall
Objective List: 19.2 Identify the factors that lead to changes in the exchange rate in the long run
Everything else held constant, increased demand for a country's ____ causes its
currency to appreciate in the long run, while increased demand for ____ causes its currency
to depreciate.
A) imports; imports
B) imports; exports
C) exports; imports
D) exports; exports
Answer: C
Diff: 1 Type: MC Page Ref: 475 - 476
Skill: Recall
Objective List: 19.2 Identify the factors that lead to changes in the exchange rate in the long run
Everything else held constant, increased demand for a country's exports causes its currency
to ____ in the long run, while increased demand for imports causes its currency to
____.
A) appreciate; appreciate
B) appreciate; depreciate
C) depreciate; appreciate
D) depreciate; depreciate
Answer: B
Diff: 1 Type: MC Page Ref: 475 - 476
Skill: Recall
Objective List: 19.2 Identify the factors that lead to changes in the exchange rate in the long run