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exam2_sample - Exam 2(Sample 1 If the nominal exchange rate...

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Exam 2 (Sample) 1. If the nominal exchange rate falls 10 percent, the domestic price level rises 4 percent, and the foreign price level rises 6 percent, the real exchange rate will fall: A) 0 percent. B) 8 percent. C) 10 percent. D) 12 percent. 2. In a small open economy, if the government encourages investment, say through an investment tax credit, investment: 3. In a small open economy, starting from a position of balanced trade, if the government increases domestic government purchases, this produces a tendency toward a trade ______ and ______ net capital outflow. 4. In a small open economy, if the government adopts a policy that lowers imports, then the quantity of exports: 5. Net capital outflow is equal to the amount that: A) foreign investors lend here. B) domestic investors lend abroad. C) foreign investors lend here minus the amount domestic investors lend abroad. D) domestic investors lend abroad minus the amount that foreign investors lend here. Page 1
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6. If domestic saving exceeds domestic investment, then net exports are ______ and net capital outflows are ______. 7. In a small open economy, if consumers shift their preferences toward Japanese cars, then net exports:
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