If U.S. interest rates rise while foreign interest rates remain unchanged,
A. GDP will not change since the shift in aggregate supply cancels the positive effects on aggregate demand.
B. the dollar will depreciate and thus reduce prices and output.
C. foreign capital will be attracted to the United States and the dollar will appreciate.
D. net exports will increase and the economy will expand.
Answer: C
You might also like to view...
The payroll tax receipts
a. are used to reduce the national debt. b. are invested in private business for future payments. c. pay off current recipients of Social Security payments. d. go directly into a trust fund for investment in private businesses.
Which of the following effects will not increase (i.e., shift to the right) the aggregate supply curve?
a. An increase in the average national price level. b. A decrease in the price of fuel. c. An appreciation of the domestic currency. d. All of these answers are correct. e. None of these answers is correct.
Why is the aggregate expenditure model important to economists?
a. It helps explain fluctuations in the economy that can cause major disruptions. b. It illuminates methods of fostering long-term growth in the economy. c. It explains why the economy sometimes produces beyond the natural rate of real output. d. It aids economic planning by providing a measure of the level of inflation in the economy.
In the presence of long lags, attempts at stabilizing the economy may actually destabilize it.
Answer the following statement true (T) or false (F)