A senator renounces his past support for protectionism: "The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. Ifwe subsidae US. exports instead, we can reduce the deficit by increasing our competitiveness.Shew the effect of an export subsidy on the market for foreign exchangeDemandBupplybenandQuantiy of DotarsQuantity of DollarsTrue or False: The U.S. real exchange rate depreciates as a result of this export subsidy.O TrueO FalseThe export subsidy leads toin the trade deficit.

The nominal exchange rate takes inflation differentials into consideration among the countries into…

Answered: True or False: The U.S. real exchange…

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Economics

True or False: The U.S. real exchange rate depreciates as a result of this export subsidy. O True O False

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

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Question

A senator renounces his past support for protectionism: "The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. If
we subsidae US. exports instead, we can reduce the deficit by increasing our competitiveness.
Shew the effect of an export subsidy on the market for foreign exchange
Demand
Bupply
benand
Quantiy of Dotars
Quantity of Dollars
True or False: The U.S. real exchange rate depreciates as a result of this export subsidy.
O True
O False
The export subsidy leads to
in the trade deficit.

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