When a Temporary Adverse Supply Shock Hits a Large Open

question 39

Multiple Choice

When a temporary adverse supply shock hits a large open economy,it causes the current account to ________ and investment to ________.

• A)fall; fall
• B)rise; remain unchanged
• C)fall; remain unchanged
• D)rise; fall

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Definitions:

US Dollars

The currency issued by the United States, functioning as its primary medium of exchange and a global reserve currency.

Tourism

The activity of traveling to and staying in places outside one's usual environment for leisure, business, or other purposes.

US Exports

Goods, services, or commodities sent from the United States to other countries for sale or trade.

Exchange Rate

The exchange rate is the price at which one currency can be exchanged for another, influencing international trade and investments.