If the U.S. government imposes an import quota on beef, U.S. net exports will
A)increase, the real exchange rate of the dollar will appreciate, and domestic sales of U.S. beef will increase.
B)increase, the real exchange rate of the dollar will depreciate, and domestic sales of U.S. beef will not change
C)not change, the real exchange rate of the dollar will appreciate, and domestic sales of U.S. beef will increase.
D)not change, the real exchange rate of the dollar will depreciate, and domestic sales of U.S. beef will not change.

Question

Quizplus · Accepted Answer

An import quota on beef will not change net exports because it affects imports, not exports. The real exchange rate will appreciate due to reduced supply of foreign beef, making U.S. beef more competitive domestically, thus increasing domestic sales.

If the US Government Imposes an Import Quota on Beef, U