What Effect Does a Depreciation of the Dollar Have on Real

question 221

Multiple Choice

What effect does a depreciation of the dollar have on real GDP in the United States in the short run?

• A)Real GDP will fall.
• B)Real GDP will rise.
• C)Real GDP will be unaffected by the depreciation of the dollar.
• D)Real GDP will be unchanged,but nominal GDP will rise.

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Definitions:

Payroll Tax Expense

The financial charge associated with employing labor, including taxes imposed by government entities such as Social Security and Medicare taxes in the United States.

Current Liability

A financial obligation that is due to be paid within one year.

Notes Payable

Financial obligations or loans that companies are required to pay back within a specified timeframe, often evidenced by promissory notes.

Wage and Tax Statement

A document, typically a W-2 form in the U.S., that reports an employee's annual wages and the amount of taxes withheld from their paycheck.