Answered: A currency appreciation reduces…

Business

Economics

A currency appreciation reduces aggregate demand and raises aggregate supply. True False

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter6: Managing In The Global Economy

Section: Chapter Questions

Problem 5E

See similar textbooks

Related questions

Q: When a country devalues its currency, we expect that A.income will fall because the devaluation…

A: Devaluation refers to the deliberate downward adjustment of the current value of a country. This…

Q: If the price of the dollar changes from 100 Japanese yen to 120 Japanese yen, the dollar has…

A: Exchange rate play a major role in deciding the fate of the economy especially with regards to that…

Q: If the dollar appreciates, it can be said that a. it takes more dollars to buy foreign…

A: If the dollar appreciates, it implies that the exchange rate increases and the relative price of US…

Q: When the Australian dollar appreciates, we know that, other things equal:the dollar is less…

A: The exchange rate determines the price of the currency of a domestic country when it is exchanged…

Q: An increase in the supply of U.S. dollars by the Federal Reserve will a. raise the value of the…

A: Customers must pay for goods and services in dollars; therefore, when the United States exports…

Q: currency becomes more valuable

A: an exchange rate is the rate at which one national currency will be exchanged for another. In other…

Q: Thailand is a net-importer. This means that they import more than they export. How does this affect…

A: The exchange rate refers to the rate at which currency of one country can be exchanged with the…

Q: Currently, it takes two Belize dollars to buy a U.S. dollar. If that number were to rise to three,…

A: Appreciation and depreciation of currency of one country cause negatively and positively among…

Q: In your opinion, does currency depreciation solve the economic problems of a country? Justify your…

A: Economic problem: It refers to the problem under which the economy has to face the problem related…

Q: Suppose GDP in Europe and in the U.S. rises. What is the most likely outcome below to the dollar…

A: When two countries are open to trade, any change in the GDP, income, and other economic variables…

Q: Which of the following is likely to occur for the United States, if the US dollar loses strength…

A: AD(aggregate demand) has the following components: AD=C+I+G+X-Mwhere:C is consumptionI is…

Q: A restrictive monetary policy in Canada is most likely to: Multiple Choice depreciate the…

A: Central banks use restrictive monetary policy to hinder economic development. The term "restrictive"…

Q: Suppose there is a real depreciation of the domestic currency. This real depreciation will cause:an…

A: Currency represents the country's value during the trade between the markets. During an…

Q: The value of the currency of a domestic country tends to increase if its inflation rate is…

A: When talking about the relationship between exchange rate and inflation rate, it can be said that a…

Q: Exhibit 9- Foreign exchange market for U.S. dollars and British pounds. Picture attached Exhibit 9…

A: The exchange market is a market in which the currencies are being exchanged with one another. The…

Q: To keep the U.S. dollar from depreciating against the Japanese yen, the U.S. Federal Reserve must…

A: To keep the U.S. dollar from depreciating against the Japanese yen, the U.S. Federal Reserve must…

Q: Country A’s goods have become relatively less expensive for Country B’s buyers due to a change in…

A: For country B's buyers,imports have become less expensive. That happens when exchange rate…

Q: Foreign Exchange Market: show graphically and explain the effect of the following in the foreign…

A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…

Q: Select all of the following that are true: A. An appreciation of the currency will reduce the…

A: Since you have posted a multiple-part question, we will solve the first three parts for you. if you…

Q: Suppose that, initially, the foreign exchange market between the United Kingdom and Canada is in…

A: Here, it is given that the exchange rate market between UK and Canada is in equilibrium.

Q: Does Currency Depreciation Stimulate Exports? In response to the Great Recession of 2007- 2009,…

A: Answer in Step 2

Q: With a fixed exchange rate, if there is excess demand for the domestic currency then the central…

A: A fixed exchange rate, frequently called a pegged exchange rate, is a sort of conversion scale…

Q: Display graphically changes in the current value of domestic currency, if the domestic currency…

A: If the domestic currency is going to appreciate at a significant rate in terms of foreign…

Q: If the central bank raises interest rates it will A) lower aggregate demand and raise the…

A: " Aggregate demand reflects the relationship between price level and total number of all the final…

Q: Explain each of the ways government policymakers can respond to an overvalued A. devaluing the…

A: Government's policymaker's response to an overvalued currency: A.Devaluing the currency Government…

Q: Appreciation of the domestic currency will Select one: a. increase domestic aggregate demand. b.…

A: The exchange rate between any two nations' currencies is defined as the price at which the currency…

Q: As the price level falls, the purchasing power of households' real wealth will causing the quantity…

A: As the price falls, purchasing power of households real wealth would increase. This is because now…

Q: Currently, It takes two Bellze dollars to buy a U.S. dollar. If that number were to rise to three,…

A: We show that, Informing the rise in the value of the currency compared to another country. This…

Q: Purchasing power parity does not hold in the short to medium run because (a) exports don’t equal…

A: International trade allows nations to interact with one another in the form of export and import of…

Q: The yen has been depreciating relative to the U.S. dollar in recent weeks due to which of the…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: This summer has been very hot. In fact, many crops that need water to thrive have been suffering…

A: When there is a rise in imports or a fall in the export of a country it implies a negative impact on…

Q: The IS/LM/BP analysis suggests that, under flexible exchange rates, Select one: a. monetary policy…

A: The IS-LM-BP model, typically referred to as the Mundell–Fleming model, is Associate in Nursing…

Q: To prevent an appreciation of the British pound, the U.S. Federal Reserve has to: Sell U.S.…

A: An appreciation means an increase in the value of a currency against other foreign currencies. An…

Q: A currency is said to appreciate in real terms if, other things remaining unchanged, a) domestic…

A: The price of domestic currency in terms of foreign currency is called the exchange rate. For…

Q: hard currency implies a strong currency that is well supported by reserves. that coins are…

A: The currency that is generally been issued or printed by a country that is seen as politically and…

Q: A currency appreciation should a. reduce net exports and therefore increase aggregate demand.…

A: An exchange rate is how we determine the value of one currency in terms of another. The central bank…

Q: Country A’s goods have become relatively more expensive for Country B’s buyers due to a change in…

A: Country A’s goods have become relatively more expensive for Country B’s buyers due to a change in…

Q: What is the effect of a devaluation of a domestic currency? A) Domestic goods will…

A: A currency may devaluate or revaluate under the fixed exchange rate regime in order to stabilize the…

Question

A currency appreciation reduces aggregate demand and raises aggregate supply.

True

False

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Which of the following is likely to occur for the United States, if the US dollar loses strength relative to the Japanese yen, ceteris paribus? A- Aggregate demand will decrease (shift left) B- Aggregate demand will increase (shift right) C- Aggregate supply will increase (shift right) D- Aggregate supply will decrease (shift left)
A currency appreciation moves the BP curve to the ... because exports ... and imports ... . The interest rate must ... since ... capital inflows are needed.
Distinguish between a nominal appreciation and a real appreciation of a currency.
When the U.S. dollar appreciates relative to the Japanese yen: Answers: A. Japanese goods imported to the U.S. are more expensive for U.S. consumers. B. U.S. goods exported to Japan are cheaper for Japanese consumers. C. Japanese tourists to the U.S. are worse off. D. All of the above.
The U.S. economy is faltering, so the value of its associated currency, the dollar, is likely to
If the yen appreciates in value, then: Question 3 options: It is more expensive for Americans to buy Japanese products but cheaper for Japanese to buy American goods It is cheaper for Americans to buy Japanese goods and cheaper for Japanese to buy American goods It is more expensive for Americans to buy Japanese products and more expensive for Japanese to buy American products It is cheaper for Americans to buy Japanese goods but more expensive for Japanese to buy American goods.
To keep the U.S. dollar from depreciating against the Japanese yen, the U.S. Federal Reserve must Buy Yen and sell U.S. dollars. Buy both Yen and U.S. dollars. Sell Yen and buy U.S. dollars. Sell both Yen and U.S. dollars.
Suppose country A’s goods become more popular with foreign consumers, and country B’s less so. How would this affect each country, assuming that they (a) have their own independent currency and (b) share a common currency? Use the aggregate demand (AD) and aggregate supply (AS) framework to explain your answer, and comment briefly on the desirability of currency union.
Refer to the graph shown. If an increase in the demand for US produced goods, services, and assets shifts the supply curve to the right: The euro will depreciate The dollar will depreciate None of the available awers The euro will appreciate
Which best explains why U.S. businesses want the U.S. dollar to decrease in value against the Chinese renminbi? They want to be able to buy more raw materials from China. They want to sell more products to Chinese consumers. They want to buy more goods from Chinese businesses for resale. They want to be able to move their factories to China.
What does it mean when the dollar appreciates compared to when the dollar depreciates? Has the US dollar been relatively strong or weak over the past year? How does the strength of the dollar affect exports and imports?
Which group will most likely be negatively affected if the U.S. dollar drops in value against the British pound? American businesses purchasing equipment from Great Britain British businesses exporting products to the United States British consumers buying imported American products American producers shipping their goods to Great Britain