If the Dollar Depreciates Because of Speculation or Government Policy,U

question 89

Multiple Choice

If the dollar depreciates because of speculation or government policy,U.S.

• A)aggregate demand shifts left.U.S.aggregate demand also shifts left if other countries experience an increase in real GDP.
• B)aggregate demand shifts left.U.S.aggregate demand shifts right if other countries experience an increase in real GDP.
• C)aggregate demand shifts right.U.S.aggregate demand also shifts right if other countries experience a decrease in real GDP.
• D)aggregate demand shifts right.U.S.aggregate demand shifts left if other countries experience a decrease in real GDP.

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Definitions:

Probability

The measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Risk Premium

Higher expected rates of return that compensate investors in risky assets. In equilibrium, differences in the rate of return reflect differences in the riskiness of an investment.

Low Risk Asset

An investment that is generally expected to yield returns with relatively lower volatility or risk of loss.

High Risk Asset

An investment with a high potential for significant loss but also the potential for substantial rewards.