If the government of Colombia made policy changes that increased national saving, the real exchange rate of the peso would
A)depreciate and Colombian net exports would rise.
B)depreciate and Colombian net exports would fall.
C)appreciate and Colombian net exports would rise.
D)appreciate and Colombian net exports would fall.

Question

Quizplus · Accepted Answer

An increase in national saving leads to an appreciation of the real exchange rate, making Colombian exports more expensive and imports cheaper. This leads to a fall in net exports.

If the Government of Colombia Made Policy Changes That Increased