Figure 32-3
Refer to the following diagram of the open-economy macroeconomic model to answer the questions that follow.

Graph (a)
Graph (b) Graph (c)
-Refer to Figure 32-3. Which curve shows the relation between the exchange rate and net exports?
A)The demand curve in graph (a).
B)The demand curve in graph (c).
C)The supply curve in graph (a).
D)The supply curve in graph (c).

Question

Figure 32-3
Refer to the following diagram of the open-economy macroeconomic model to answer the questions that follow.
​
Graph (a)
Graph (b)   Graph (c)  ​
-Refer to Figure 32-3. Which curve shows the relation between the exchange rate and net exports?
A)The demand curve in graph (a). 
B)The demand curve in graph (c). 
C)The supply curve in graph (a). 
D)The supply curve in graph (c).

Quizplus · Accepted Answer

The demand curve in graph (c) typically represents the relationship between the exchange rate and net exports, as a lower exchange rate makes a country's goods cheaper for foreigners, thus increasing net exports, while a higher exchange rate does the opposite.

Figure 32-3 Refer to the Following Diagram of the Open-Economy Macroeconomic Model