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) and the real exchange rate remains unchanged.

Question

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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) and the real exchange rate remains unchanged.

In a Small Open Economy, If Consumers Shift Their Preference