In a small open economy with a floating exchange rate, if the government imposes a tariff on foreign goods, then in the new short-run equilibrium: a. imports will decrease while exports remain constant, leading to a rise in net exports. b. imports will decrease and exports will increase, leading to a rise in net exports. c. imports will decrease and exports will decrease by an equal amount. d. both imports and exports will remain unchanged.
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Home » Business » In a small open economy with a floating exchange rate, if the government imposes a tariff on foreign goods, then in the new short-run equilibrium: a. imports will decrease while exports remain constant, leading to a rise in net exports. b.