Solved

Going Back to When France and Germany Had Separate Currencies

Question 23

Multiple Choice

Going back to when France and Germany had separate currencies, if there was a shift in demand away from French goods and towards German goods, then


A) there would be an increase in the rate of inflation in France.
B) there would be an increase in unemployment in Germany.
C) the foreign exchange value of the French franc would fall, thus making French goods relatively cheaper, leading to an increase in aggregate demand for France's output that would offset the initial reduction in aggregate demand.
D) the foreign exchange value of the French franc would rise, thus making French goods relatively more expensive and so leading to an reduction in aggregate demand for France's output that would worsen the initial reduction in aggregate demand.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents