Consider the Following News Headline: "Canadian Business Leaders Fear Reduced

question 39

Multiple Choice

Consider the following news headline: "Canadian business leaders fear reduced world demand for commodities".Which of the following correctly describes the likely effect in our simple macro model?

• A)The consumption function shifts upward.
• B)The AE function shifts downward.
• C)The investment function shifts upward.
• D)The savings function shifts downward.
• E)The AE function shifts upward.

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Definitions:

Exchange-Rate Systems

The rules and conventions that govern how the value of a country's currency is determined in relation to other currencies.

European Euro

The official currency of 19 out of the 27 European Union countries, used as a common currency to facilitate trade and economic stability in the region.

Foreign Exchange Market

The global marketplace for trading currencies, determining the foreign exchange rates for every currency.

Depreciation

The decrease in value of an asset over time, often due to wear and tear or obsolescence.