Which of the following would cause the real exchange rate of the U.S.dollar to appreciate?
A)the U.S.government budget deficit decreases
B)capital flight from the U.S.
C)the U.S.imposes import quotas
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Imposing import quotas reduces the supply of dollars in the foreign exchange market, leading to an appreciation of the real exchange rate.

Which of the Following Would Cause the Real Exchange Rate