If the United States raised its tariff on tires, then at the original exchange rate there would be a Oa. surplus in the market for foreign-currency exchange, so the real exchange rate would appreciate. Ob. shortage in the market for foreign-currency exchange, so the real exchange rate would appreciate. Oc. shortage in the market for foreign-currency exchange, so the real exchange rate would depreciate. Od. surplus in the market for foreign-currency exchange, so the real exchange rate would depreciate.

If the United States raised its tariff on tires, then at the original exchange rate there would be a Oa. surplus in the market for foreign-currency exchange, so the real exchange rate would appreciate. Ob. shortage in the market for foreign-currency exchange, so the real exchange rate would appreciate. Oc. shortage in the market for foreign-currency exchange, so the real exchange rate would depreciate. Od. surplus in the market for foreign-currency exchange, so the real exchange rate would depreciate.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter29: International Finance

Section: Chapter Questions

Problem 8P

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A change in the euro-dollar exchange rate from $1 per epro to $2 per euro would price of German goods, the number of German goods that would be demanded in the U.S. the U.S. O decrease; reducing. O decrease; increasing. O increase; reducing. O increase; increasing.
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Suppose that Canada imposes an import quota on steel. Which statement best describes the most likely effects of this quota? a. The quota would cause the real exchange rate of Canadian dollars to depreciate, but it would not change the real interest rate in Canada. b. The quota would cause the real exchange rate of Canadian dollars to appreciate, but it would not change the real interest rate in Canada. c. The quota would cause the real exchange rate of Canadian dollars to depreciate and the real interest rate in Canada to decrease. d. The quota would cause the real exchange rate of Canadian dollars to appreciate and the real interest rate in Canada to increase.
What is the difference between depreciation and devaluation? O There is no difference. O Depreciation refers to a fixed exchange rate, while devaluation refers to a floating exchange rate. O Depreciation refers to a floating exchange rate, while devaluation refers to a fixed exchange rate.
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