In a small open economy, if consumers shift their preference toward Japanese cars, then net exports:
A)fall, and the real exchange rate falls.
B)fall, but the real exchange rate remains unchanged.
C)remain unchanged, but the real exchange rate falls.
D)increase, and the real exchange rate remains unchanged.

Question

Quizplus · Accepted Answer

The Answer of In a small open economy, if consumers shift their preference toward Japanese cars, then net exports:
A)fall, and the real exchange rate falls.
B)fall, but the real exchange rate remains unchanged.
C)remain unchanged, but the real exchange rate falls.
D)increase, and the real exchange rate remains unchanged.

In a Small Open Economy, If Consumers Shift Their Preference