Figure 32-4
Refer to the following diagram of the open-economy macroeconomic model to answer the questions that follow.

Graph (a)
Graph (b) Graph (c)
-Refer to Figure 32-4. In the market for foreign-currency exchange, the effects of an increase in the budget surplus shown in graph (c) can be illustrated as a move from j to
A)g.
B)h.
C)i.
D)k.

Question

Figure 32-4
Refer to the following diagram of the open-economy macroeconomic model to answer the questions that follow.
​
Graph (a)  
Graph (b)  Graph (c) 
-Refer to Figure 32-4. In the market for foreign-currency exchange, the effects of an increase in the budget surplus shown in graph (c) can be illustrated as a move from j to
A)g. 
B)h. 
C)i. 
D)k.

Quizplus · Accepted Answer

An increase in the budget surplus typically leads to a decrease in interest rates, which reduces the inflow of foreign capital, leading to a depreciation of the domestic currency. This is represented by a shift from point j to point k, indicating a movement to a lower exchange rate and a higher quantity of foreign currency exchanged.

Figure 32-4 Refer to the Following Diagram of the Open-Economy Macroeconomic Model