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Which of the Following Is FALSE

Question 20

Multiple Choice

Which of the following is FALSE?


A) a rise in foreign income always improves a country's trade balance and leads to an increase in aggregate demand
B) a rise in domestic interest rates improves a country's trade balance since it decreases imports
C) an exchange rate depreciation improves a country's trade balance and thus increases aggregate demand
D) an increase in domestic income worsens a country's trade balance since it increases spending on imports
E) a decrease in exports leads to lower interest rates and a currency depreciation

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