The chapter notes that the rise in the u. s. trade deficit during the 1980s was due largely to the rise in the u. s. budget deficit. on the other hand, some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of u. s. products relative to foreign products. assume that u. s. products did decline in relative quality during the 1980s. this caused net exports at any given exchange rate to increase/decrease? indicate the effect of this shift in net exports on the u. s. market for foreign exchange.(draw a graph)according to this model, which of the following statements are true as a result of the quality change? check all that apply. there is no change in the real interest rate. net capital outflow is unchanged. there is no change in the trade balance. the real exchange rate declines.

Ummit record company is negotiating with two banks for a $157,000 loan. fidelity bank requires a compensating balance of 24 percent, discounts the loan, and wants to be paid back in four quarterly payments. southwest bank requires a compensating balance of 12 percent, does not discount the loan, but wants to be paid back in 12 monthly installments. the stated rate for both banks is 9 percent. compensating balances will be subtracted from the $157,000 in determining the available funds in part a. a-1. calculate the effective interest rate for fidelity bank and southwest bank. (do not round intermediate calculations. input your answers as a percent rounded to 2 decimal places.) a-2. which loan should summit accept? southwest bank fidelity bank b. recompute the effective cost of interest, assuming that summit ordinarily maintains $37,680 at each bank in deposits that will serve as compensating balances