Suppose the Dollar Appreciates in Value in the Foreign Exchange

question 49

Multiple Choice

Suppose the dollar appreciates in value in the foreign exchange markets. What is the impact on U.S.Real GDP?

• A) It rises because dollar appreciation shifts the U.S. AD curve leftward.
• B) It falls because dollar appreciation shifts the U.S. SRAS curve rightward.
• C) There is no effect on Real GDP since dollar appreciation does not affect either the U.S. AD or the U.S. SRAS curve.
• D) It depends on whether the U.S. AD curve shifts leftward by more or less than the U.S. SRAS curve shifts rightward.

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Definitions:

Accentuation Principle

Categorization accentuates perceived similarities within and differences between groups on dimensions that people believe are correlated with the categorization. The effect is amplified where the categorization and/or dimension has subjective importance, relevance, or value.

Human Attribute

Characteristics, traits, or qualities that define or are inherent in humans, contributing to individual identities and behaviors.

Accentuation Effect

A cognitive bias that emphasizes the differences between categories or groups of people more than they actually exist.

Categorisation

The process of grouping items or information based on shared characteristics or qualities.