Suppose that the United States imposes an import quota on televisions.In the open-economy macroeconomic model this quota shifts the
A)U.S.supply of loanable funds left.
B)U.S.demand for loanable funds left.
C)demand for U.S.dollars in the market for foreign-currency exchange right.
D)supply of U.S.dollars in the market for foreign-currency exchange left.

Question

Quizplus · Accepted Answer

Imposing an import quota on televisions will reduce the supply of foreign currency (as imports will decrease), increasing the demand for U.S. dollars in the market for foreign-currency exchange. This will cause the value of the U.S. dollar to appreciate, making imports more expensive and exports cheaper.

Suppose That the United States Imposes an Import Quota on Televisions.In