If the Dollar Depreciates in Value Relative to Foreign Currencies

question 32

Multiple Choice

If the dollar depreciates in value relative to foreign currencies, then aggregate

• A) demand decreases.
• B) demand increases.
• C) supply and aggregate demand increase.
• D) supply and aggregate demand decrease.

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Definitions:

Monetary Policy

Actions by a central bank or other regulatory authority to influence a nation's money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.

Fiscal Policy

Government policies related to taxation and public spending with the aim of influencing economic conditions, including growth, inflation, and unemployment rates.

Legislation

Laws and statutes that are enacted by a legislative body through its legislative process.

Marginal Propensity

The portion of additional income that an individual spends on consuming goods and services, as opposed to saving.