1) Suppose U.S. interest rates fall. This reduction in U.S. interest rates will
ID: 1164385 • Letter: 1
Question
1) Suppose U.S. interest rates fall. This reduction in U.S. interest rates will cause which of the following to occur?
an inflow of capital to the United States
2) If a country wants to keep its exchange rate fixed, it must
3) Aggregate demand is
4)When the economy is in long-run equilibrium, the price level adjusts so as to equate which two values with one another?
an outflow of capital from the United States no change in foreign investment in the United States an increase in the value (appreciation) of the U.S. dollaran inflow of capital to the United States
2) If a country wants to keep its exchange rate fixed, it must
allow its currency value to vary with market supply and demand in foreign exchange markets. be a member of the IMF. vary the amount of its national currency supplied at any given exchange rate in foreign exchange markets when necessary. eliminate its foreign exchange reserves.Explanation / Answer
Answer of Q1
The answer is Option A.
When the US decreases its interest rates, the borrowers borrows money from banks at lower interest rate. This will increase the money flow outside the country and hence, an outflow of capital occurs from the United States.
Answer of Q2
The answer is Option C.
If a country wants to keep its exchange rate fixed, it must vary the amount of its national currency supplied at any given exchange rate in foreign exchange markets when necessary.
Answer of Q3
The answer is Option B (the sum of all planned expenditures for the economy)
In macroeconomics, Aggregate Demand (AD) is the total demand for final goods and services in an economy at a given time. It specifies the amounts of goods and services that will be purchased at all possible price levels. This is the demand for the gross domestic product of a country.
The aggregate expenditure is thus the sum total of all the expenditures undertaken in the economy by the factors during a given time period.
Answer of Q4
The answer is Option D
)When the economy is in long-run equilibrium, the price level adjusts so as to equate total planned real expenditures and total planned production.
Answer of Q1
The answer is Option A.
When the US decreases its interest rates, the borrowers borrows money from banks at lower interest rate. This will increase the money flow outside the country and hence, an outflow of capital occurs from the United States.
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