Assume that the economy is currently in short-run equilibrium, then the dollar appreciates in the foreign exchange market. Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP)
As the dollar appreciates, foreign goods become cheaper. Americans would then increase their purchases of imported goods. When the dollar appreciates with respect to a foreign currency, the foreign currency depreciates with respect to the dollar. This would make American goods cheaper for people living in that foreign country, and they would thus purchase more U.S. exports. The combination of an increase in imports and a decrease in exports, results in a decrease in net exports. A decrease in net exports will reduce aggregate demand (AD) in the United States. This would push the AD curve leftward, resulting in a decrease in the price level and a decrease in Real GDP.
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Which of the following sequences accurately describes the evolution of the payments system?
A) barter, coins made of precious metals, paper currency, checks, electronic funds transfers B) barter, coins made of precious metals, checks, paper currency, electronic funds transfers C) barter, checks, paper currency, coins made of precious metals, electronic funds transfers D) barter, checks, paper currency, electronic funds transfers
Which of the following institutions is responsible for check processing?
a. U.S. Department of the Treasury b. Comptroller of the Currency c. Federal Reserve d. Federal Deposit Insurance Corporation
Recession is to depression as expansion is to ______.
a. the business cycle b. contraction c. a trough d. a boom
In the aggregate expenditures model, if aggregate expenditures (AE) are greater than GDP, then:
A. inventory is unchanged. B. inventory is accumulated. C. employment decreases. D. GDP increases.