What are the economic effects of a currency depreciation?
A) It will decrease aggregate demand and aggregate supply, so that output will certainly fall, and prices may fall as well.
B) It will increase aggregate demand and aggregate supply, so that output will certainly rise, and prices may rise as well.
C) It will increase aggregate demand and decrease aggregate supply, so that prices will certainly rise, and output may rise as well.
D) It will decrease aggregate demand and increase aggregate supply, so that prices will certainly fall, and output may fall as well.
Correct Answer:
Verified
Q94: Figure 36-4 Q95: If the dollar rises in value compared Q96: A currency appreciation is disinflationary and contractionary Q97: In an open economy, aggregate supply consists Q98: If the international value of the dollar Q100: If the demand effect dominates during a Q101: A fall in the domestic interest rate Q102: A rise in the domestic interest rate Q103: If U.S.interest rates rise while foreign interest Q104: For a major country with extensive capital
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents