5. If domestic and foreign prices rise by the same relative amount, what will ha

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5. If domestic and foreign prices rise by the same relative amount, what will happen to the trade balance? A) It will rise. B) nothing C) It will fall. D) not enough information 6. A result of an exchange rate Increase (depreciation), _____ would occur as the spending patterns change In response to a change in the exchange rate. A) expenditure switching from domestic to foreign products B) expenditure switching from foreign to domestic products C) expenditure switching from rural to urban producers D) terms-of-trade deterioration 7. SCENARIO: ARGENTINE PESO Suppose that Argentina?s dollar-denominated external assets and liabilities are $10 billion and $100 billion, respectively, and its Argentine peso (P) denominated external assets and liabilities are each 50 billion pesos. Suppose further than Argentina fixes its exchange rate at Pl = $US1. Reference Ref 19-2 (Scenario: Argentine peso) What is the peso value of Argentina?s total external wealth? A) -60 billion pesos B) -150 billion pesos C) 0billion pesos 0) -90 billion pesos

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