Suppose that the value of the US dollar ($) yesterday was $1 = 4 euros
.
Today the exchange rate changed such that $1 = 1
euros
.
One can say that the
Part 2
A.
US $ depreciated.
B.
The euro
depreciated.
C.
US $ appreciated.
D.
The euro
accelerated.
B. The euro appreciated.
that is not one of the answer choice.
In that case, the correct answer would be C. US$ appreciated.
appreciated mean
"Appreciated" in this context means that the US dollar increased in value compared to the euro. So, today, one US dollar can buy more euros than it could yesterday.
A depreciation of the U.S. dollar should result in
Part 4
A.
a lower price level and a higher level of real GDP.
B.
a higher price level and a lower level of real GDP.
C.
a higher price level and a higher level of real GDP.
D.
a higher price level but the impact on the level of real GDP depends on the magnitude of the shifts in the aggregate demand and short-run aggregate supply curves.
D. A depreciation of the US dollar should result in a higher price level, but the impact on the level of real GDP depends on the magnitude of the shifts in the aggregate demand and short-run aggregate supply curves.
Typically, a weaker US dollar leads to higher prices for imported goods and can increase inflationary pressures in the economy. However, a weaker US dollar can also make US exports more competitive, leading to an increase in demand and potentially an increase in real GDP. The overall impact on real GDP depends on the size of these effects and any other shifts in aggregate demand and supply.