When the Real Exchange Rate for the Dollar Appreciates,U

question 40

Multiple Choice

When the real exchange rate for the dollar appreciates,U.S.goods become

• A)less expensive relative to foreign goods,which makes exports rise and imports fall.
• B)less expensive relative to foreign goods,which makes exports fall and imports rise.
• C)more expensive relative to foreign goods,which makes exports rise and imports fall.
• D)more expensive relative to foreign goods,which makes exports fall and imports rise.

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Definitions:

Crowding-out Effect

A situation where increased government spending leads to a reduction in private sector investment.

Multiplier Effect

An economic phenomenon where an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

Aggregate Demand

The aggregate market demand for goods and services in an economic environment, valued at a specific price level within a certain timeframe.

MPC

Marginal Propensity to Consume, which is the proportion of any additional income that a consumer spends on goods and services.