If the government of Pakistan made policy changes that increased national saving, which statement would best predict the consequences?
A) The real exchange rate of the rupee would depreciate, and Pakistan net exports would rise.
B) The real exchange rate of the rupee would depreciate, and Pakistan net exports would fall.
C) The real exchange rate of the rupee would appreciate, and Pakistan net exports would rise.
D) The real exchange rate of the rupee would appreciate, and Pakistan net exports would fall.

Question

Quizplus · Accepted Answer

An increase in national saving would lead to a lower interest rate, causing the real exchange rate to depreciate, making exports cheaper and imports more expensive, thus increasing net exports.

If the Government of Pakistan Made Policy Changes That Increased