If the Value of the Dollar Plummets in International Currency

question 125

Multiple Choice

If the value of the dollar plummets in international currency markets,initially this causes foreigners to buy more American goods.Which of the following indicates the appropriate change in the U.S.economy?

• A) The economy moves up along the aggregate demand curve
• B) The economy moves down along the aggregate demand curve
• C) Aggregate demand shifts to the left
• D) Aggregate demand shifts to the right

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Definitions:

Federal Funds Rate

The interest rate at which banks make overnight loans to one another

Money Demand

The desire to hold cash rather than other forms of assets due to its liquidity, determining how much money is needed for transactions, precautionary, and speculative motives.

Money Supply

The whole amount of cash, coins, and the funds in checking and savings accounts that make up the monetary resources within an economy at a specific period.

Monetary Policy

Government or central bank policies aimed at controlling the supply of money and interest rates in an economy.