Question 33 1 pts When EPyP rises O Imports will rise O Imports may rise or fall

Question

Question 33 1 pts When EPyP rises O Imports will rise O Imports may rise or fall O Imports will fall O Imports are not affected D Question 34 1 pts If nominal exchange rate is 5, domestic price level is 20 and real exchange rate is 7.5. What is the foreign price level? 25 35 O 30 0 40 D Question 35 2 pts How does a rise in real income affect aggregate demand? O Y implies Yd implies Im implies CAI implies AD , but Y implies Yd implies C implies AD by more O Y implies Yd implies lin implies CA implies AD , but Y implies Yd implies C implies AD t by less O Y implies Yd implies Im implies CA implies AD , but Y implies Yd implies C t implies AD t by less O Y implies Yd implies lmt implies CA implies AD , but Y implies Yd implies C implies AD by more

Explanation / Answer

ANS 33=option 2=Imports might fall/ rise

Domestic customers react to price fluctuation by buying lesser units of the more expensive foreign item. This doesn’t mean that IM declines, as IM signify the WORTH of imports calculated in terms of the domestic output, & not the VOLUME of overseas items imported. As EP*/P tends to increase the worth of all units of imports in terms of domestic output units, imports calculated in domestic output units may increase as an outcome of EP*/P rising even if imports fall when calculated in overseas output units

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