In a Large Open Economy, If an Import Quota Is

Multiple Choice

In a large open economy, if an import quota is adopted, then:

A) net exports remain unchanged, as imports and exports decrease by equal amounts, while the real exchange rate rises.
B) net exports remain unchanged, as imports and exports decrease by equal amounts, while the real exchange rate falls.
C) net exports rise and the real exchange rate rises.
D) net exports rise and the real exchange rate falls.