Exam 36: Exchange Rates and the Macroeconomy

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

Currency appreciation should reduce net exports and, therefore, decrease aggregate demand.

To eliminate the trade deficits in the late 1990s would have required, in addition to the reduction of the federal budget deficit, an increase in

Which of the following usually leads to currency appreciation?

If a currency depreciates, a country's net exports

If the international value of the dollar rises, the

If (X − IM) < 0, then capital inflows

Despite the elimination of the federal budget deficit in the late 1990s, the trade deficit increased due to

Figure 36-2 -Which of the following explains the movements in Figure 36-2?

An appreciation of the dollar makes imported inputs cheaper and shifts the U.S.aggregate supply curve outward, thus pushing American prices down.

If the dollar appreciates, American consumers will buy more foreign goods and services.

When the dollar depreciates, the prices of imported inputs rise, and the U.S.aggregate supply curve, therefore, shifts inward, pushing up the prices of American-made goods and services.

Suppose that the Fed decides to decrease the growth rate of the money supply in the United States.What is most likely to happen to the U.S.trade deficit and to GDP?

Figure 36-4 ​ -Which of the situations illustrated in Figure 36-4 shows a currency appreciation leading to disinflation?

An appreciation of the dollar makes imported inputs cheaper and shifts the U.S.aggregate supply curve outward, thus pushing American prices down.

In the 1990s, the United States eliminated its budget deficit and expanded the money supply.This should have led to

If Asian economies suffer a serious economic slump, U.S.net exports will

Table 36-2 ​ -In Table 36-2, what are net exports when GDP = 3,500?

A currency depreciation would _____ net exports, and therefore ___________ aggregate demand.

Between 1981 and 1986, as the federal budget deficit increased,