If the U.S. imposed an import quota on apples, then which of the following would rise?
A)the U.S. real exchange rate and U.S. net exports
B)the U.S. real exchange rate but not U.S. net exports
C)U.S. net exports but not the U.S. real exchange rate
D)neither the U.S. real exchange rate nor U.S. net exports

Question

Quizplus · Accepted Answer

An import quota on apples would reduce the supply of foreign apples in the U.S., increasing the demand for domestic apples, which could lead to an appreciation of the U.S. real exchange rate. However, net exports would not rise because the quota does not affect the overall trade balance.

If the US Imposed an Import Quota on Apples, Then Which of Which