An Exchange Rate Shock Coupled with Austerity Would Tend To

question 44

Multiple Choice

An exchange rate shock coupled with austerity would tend to:

• A) lower real GDP.
• B) raise real GDP.
• C) increase SRAS.
• D) lower LRAS.
• E) none of the above

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Definitions:

Equity Method

A method of accounting in which an investor recognizes its share of the profits and losses of an investee company in its own profit and loss statement, proportional to the investor's share of equity in the investee.

Diluted Earnings Per Share

A metric that calculates a company’s earnings per share considering all potentially convertible securities.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and usually receives dividends before common shareholders.

Convertible

Refers to a security, usually a bond or a preferred stock, that can be converted into a specified number of shares of common stock.