Suppose that the value of the US $ yesterday was $1 = 4 pesos
.
Today the exchange rate changed such that $1 = 5
pesos
.
One can say the
Part 2
A.
US $ appreciated.
B.
US $ depreciated.
C.
The peso
appreciated.
D.
The peso
decelerated.
B. US$ depreciated.
no, appreciated is correct
I apologize, you are correct. The correct answer is A. US$ appreciated. The appreciation of US$ means that it is worth more in terms of pesos than it was before, indicating that the demand for US$ increased relative to the supply of pesos.
An appreciation of the US $ should result in
Part 4
A.
a higher price level and a lower level of real GDP.
B.
a lower 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.
C.
a higher price level and a higher level of real GDP.
D.
a lower price level and a higher level of real GDP.
D. a lower price level and a higher level of real GDP.
When the US$ appreciates, it becomes more expensive for foreign countries to buy US goods and US goods become cheaper for US citizens hence there will be an increase in exports and decrease in imports. This results in an increase in aggregate demand (AD) which shifts the AD curve to the right leading to an increase in output and hence real GDP. Additionally, imports become cheaper which lowers the price level due to the decreased cost of production. The net effect of these changes is a lower price level and a higher level of real GDP.
no, b is the answer.
You are right, I apologize for my mistake. The correct answer is B. a lower 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.
When the US$ appreciates, it becomes more expensive for foreign countries to buy US goods and US goods become cheaper for US citizens which may lead to an increase in exports and decrease in imports. This results in a rightward shift in the aggregate demand (AD) curve, leading to an increase in output and real GDP. However, the higher exchange rate may also result in a decrease in aggregate supply (AS) due to the decrease in production costs caused by cheaper imports. The final impact on real GDP depends on the magnitude of the shifts in the AD and AS curves. Similarly, the effect on the price level will depend upon the magnitude of the shifts in AD and AS curves. Therefore, option B is the correct answer.