INTERNATIONAL ECONOMICS QUESTIONS

17. Consider the Turkish Import market where prices are expressed in totens of Turkish Liras If the world supply of Turkish inpons is perfectly elastic, then a depreciation of the IL results in an tocreate in the TL price of Imports which is less than the rate of depreciation by decreases the Import bill if price elasticity of import demand is sufficiently high. c. increases the Import bill If price elasticity of import demand is sufficiently high d. both (8) and (o) 18. Consider the Turkish import market where prices are expressed in terms of dollars, If the world supply of Turkish imports is perfectly elastic, then a depreciation of the TL results in a. no change In the foreign currency price of Imports be an increase in the import bill. C. a decrease in the import bill both (a) and (b) both (a) and (c) 19. An decrease in disposable income a improves the current account because as income decreases, consumers demand less of all goods including imported goods while exports are not affected. worsens the current account because as income decreases, consumers demand more imported goods while exports production decreases. c. worsens the current account, because as disposable income decreases, consumption decreases less than the decrease in income and hence the exportable surplus shrinks d. worsens the current account because as income decreases, the capacity to produce and export decreases. e. has ambiguous effect on the current account since both exports and imports increase, 20. A real appreciation . Raises aggregate demand because it switches both domestic and foreign spending from foreign goods to domestic goods b Raises aggregate demand because it makes foreign goods and services cheaper relative to domesike goods and services " Lowers aggregate demand because it makes domestic goods and services cheaper relative to foreign goods and services d. Lewers aggregate demand because it switches both domestic and foreign spending from domestic goods to foreign goods