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According to this model, which of the following statements are true as a result of the quality change? Check all that appiy. D There is
According to this model, which of the following statements are true as a result of the quality change? Check all that appiy. D There is no change in the real interest rate. D Net capital outow decreases. D The real exchange rate declines. D The trade balance decreases. True or False: The claim that some people made in the popular press is not consistent with the model in this chapter. (3' True C) False True or False: The change in the real exchange rate that resulted from the decline in the qualityr of U.S. products ma',r decrease our standard of living. (3' True (3' False 3. Problems and Applications Q3 The chapter notes that the rise in the U.S. trade deficit during the 1980s was due largely to the rise in the U.S. budget deficit. On the other hand, some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreign products. Assume that U.S. products did decline in relative quality during the 1980s. This caused net exports at any given exchange rate to decrease increaseIndicate the effect of this shift in net exports on the U.S. market for foreign exchange. Supply O Demand O Supply Real Exchange Rate Demand Quantity of Dollars
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