Suppose a fall in stock prices makes people feel poorer. The decrease in wealth
ID: 1122808 • Letter: S
Question
Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to desire
increase consumption, shown as a movement to the right along a given aggregate-demand curve.
increased consumption, shifting the aggregate-demand curve to the right.
decreased consumption, shown as a movement to the left along a given aggregate-demand curve.
decreased consumption, shifting the aggregate-demand curve to the left.
If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would
fall, making aggregate demand shift right.
rise, making aggregate demand shift left.
fall, making aggregate demand shift left.
rise, making aggregate demand shift right.
Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of assets from country A. What would the net capital outflows of both countries be?
$20 billion for country A and -$20 billion for country B
$50 billion for country A and $30 billion for country B
-$20 billion for country A and $20 billion for country B
$30 billion for country A and $50 billion for country B
The nominal exchange rate is 4 Saudi Arabian riyals, 8 Moroccan dirham, 45 Indian rupee, or 0.6 British pounds per U.S. dollar. A double latte espresso and a cinnamon biscotti costs $6 in the U.S., 24 riyals in Saudi Arabia, 40 Moroccan dirham in Morocco, 250 Indian rupees in India, and 5 British pounds in Britain. According to these numbers, where is the real exchange rate between American and foreign goods the lowest?
Saudi Arabia
Britain
India
Morocco
increase consumption, shown as a movement to the right along a given aggregate-demand curve.
increased consumption, shifting the aggregate-demand curve to the right.
decreased consumption, shown as a movement to the left along a given aggregate-demand curve.
decreased consumption, shifting the aggregate-demand curve to the left.
Explanation / Answer
Ans:
1) decreased consumption, shifting the aggregate-demand curve to the left.
The decrease in total consumer spending will shift the aggregate demand curve to the left.
2) fall, making aggregate demand shift left.
Net exports means exports minus imports. The decrease in the imports from united states means exports of United states are decreased and which will lead to decrease in the net exports.The decrease in the net exports will shift the aggregate demand curve to the left.
3) - $20 billion for country A and $20 billion for country B .
The country A has invested $20 billion more than the country B.Hence the net capital outflows for country A is -$20 billion and for country B $20 billion.
4) Morocco
The real value of goods in morocco is 40 Moroccan dirham and the nominal value of these goods is 48 Moroccan dirham .i.e(8 moroccan dirham * 6 ).Hence the real exchange rate between American and Morocco is lower.
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