Question

1. What happens to the exchange rate and net exports in each of the following cases? a.The foreign real interest rate rises. b.Foreign output falls. c.Foreign demand for domestic goods falls. d.Domestic output falls. e.The domestic real interest rate rises.

Answer 1

Answer:

the real interest rate may have a negative effect on consumption. Use an IS ... home and foreign goods exchange for each other. ... Fall in consumption und fixed exchange rates leads to fall in output.