Question

In: Economics

1. Which of the following will not tend to happen if the U.S. dollar depreciates against...

1. Which of the following will not tend to happen if the U.S. dollar depreciates against the euro?

Multiple Choice

Europeans will find U.S. goods become less expensive in euro terms.

Many Europeans will switch and buy their own products instead of imports from the U.S.

Many Americans will switch and buy domestic goods instead of imports from Europe.

Americans will find European goods become more expensive in dollar terms.

2. The determinants of aggregate supply

Multiple Choice

explain why real domestic output and the price level are directly related.

are consumption, investment, government, and net export spending.

include resource prices and resource productivity.

explain the three distinct ranges of the aggregate supply curve.

Solutions

Expert Solution

1. Which of the following will not tend to happen if the U.S. dollar depreciates against the euro?

Answer. Many Europeans will switch and buy their own products instead of imports from the U.S.

When a currency depreciates against a foreign currency it means that it has lower value and we have to pay more for the foreign currency in terms of the domestic currency.

For example if the exchange rate is 1 Euro = 1.24 US dollar,

If the currency depreciates it may be 1 Euro= 1.30 US dollar.

It means we have to pay more US dollars to buy 1 Euro.

For Europeans imports will be cheaper since they have to pay fewer Euros.

The other three options will not happen.

2. c.include resource prices and resource productivity.

Aggregate supply is the value of the total goods and services produced in an economy in a given year. Input prices and productivity is one of the determinants.

Consumption, investment, government and net export spending are determinants of aggregate demand.

Rahul Sunny answered 1 year ago
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