If the government of India made policy changes that increased national saving, which of the following best predicts the consequences?
A)The real exchange rate of the rupee would depreciate, and Indian net exports would rise.
B)The real exchange rate of the rupee would depreciate, and Indian net exports would fall.
C)The real exchange rate of the rupee would appreciate, and Indian net exports would rise.
D)The real exchange rate of the rupee would appreciate, and Indian 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 Indian goods cheaper for foreigners, thus increasing net exports.

If the Government of India Made Policy Changes That Increased