When EP/P* rises
A) IM will rise.
B) IM will fall.
C) IM may rise or fall.
D) IM is not affected.
E) IM and P* will both rise.

Name: When EP/P* rises A) IM will rise. B) IM will fall. C) IM may rise or fall. D) IM is not affected. E) IM and P* will both rise.
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Question

Quizplus · Accepted Answer

It is not certain whether the IM will rise or fall when EP/P* rises. It will depend on several factors, such as the elasticity of demand for imports and exports, the competitiveness of the domestic industry, and the exchange rate.

When EP/P* Rises