The U.S. dollar appreciates against the euro. What is the impact on aggregate expenditures and income?
A) Both increase.
B) Both decrease.
C) Aggregate expenditure increases and income decreases.
D) Aggregate expenditure decreases and income increases.
B
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When the expected inflation rate changes, what happens to the short-run Phillips curve? To the long-run Phillips curve?
What will be an ideal response?
Firms in competitive markets can only earn economic profits in the long run, once the market is in equilibrium
a. True b. False Indicate whether the statement is true or false
The idea of menu costs suggests that
a. firms alter prices less frequently as inflation increases. b. firms alter prices more frequently as inflation increases. c. firms always alter prices when costs increase. d. firms alter prices as interest rates rise.
Answer the following statement(s) true (T) or false (F)
1. It is rare that actual and potential real GDP are equal. 2. The potential output in the United States grows over time, so the LRAS is shifting leftward over time. 3. Cost-push inflation causes an inflationary gap. 4. The classical school is associated with French economist John Maynard Keynes. 5. Economists continue to debate the actual shape of the short-run aggregate supply curve.