A Sudden Influx of Dollars from Foreign Sources Can Be

question 48

Multiple Choice

A sudden influx of dollars from foreign sources can be equivalent to a sudden and unexpected increase in the money supply. The result of such an influx therefore could be

• A) no change in the domestic economy because the dollars would still be under the control of foreign nationals.
• B) a shift in the aggregate demand curve to the left as consumption and investment expenditure declined.
• C) a shift in the aggregate demand curve to the right caused by an increase in the U.S. price level.
• D) a sudden reduction in potential GDP that would reduce actual GDP and increase interest rates.
• E) a shift in the aggregate demand curve to the right as consumption and investment expenditure increase.

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