Which of the following compete to determine whether the current account improves or worsens following a rise in the real exchange rate?
A)appreciation and depreciation
B)crowding Out effect and producers effect
C)volume effect and value effect
D)volume effect and inflation
E)producers effect and value effect

Question

Quizplus · Accepted Answer

The volume effect and value effect compete to determine the impact on the current account when the real exchange rate changes. The volume effect refers to changes in the quantity of exports and imports, while the value effect refers to changes in the price of exports and imports.

Which of the Following Compete to Determine Whether the Current