If the U.S.raised its tariff on tires,then at the original exchange rate there would be a
A)surplus in the market for foreign-currency exchange,so the real exchange rate would appreciate.
B)surplus in the market for foreign-currency exchange,so the real exchange rate would depreciate.
C)shortage in the market for foreign-currency exchange,so the real exchange rate would appreciate.
D)shortage in the market for foreign-currency exchange,so the real exchange rate would depreciate.

Question

Quizplus · Accepted Answer

Raising tariffs on tires would reduce imports, decreasing the demand for foreign currency, leading to a shortage and causing the real exchange rate to appreciate.

If the USRaised Its Tariff on Tires,then at the Original Exchange Rate