When exchange rate is flexible a decrease in country B's taxes:

CA Foundation · Business Economics · MTP · September 2025
When exchange rate is flexible a decrease in country B's taxes:
(A) A. Has no effect upon output in country B
(B) B. Causes output in country B to increase
(C) C. Results in an increase in country B's export
(D) D. None of these

Suggested Answer and Working Notes:

Correct Answer: Option (A)

A. Has no effect upon output in country B

Topics: International Trade

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