ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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AD shifts right in the US
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AD shifts left in the US
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AD is unchanged in the US
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AS shifts left in the US
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Detailed explanation-1: -In a recession, inflation will be higher than in normal times. In times of economic uncertainty, more people will hold cash instead of spending it. This creates a substantial negative balance in the economy, and since the economy uses cash to measure its output, it will flood the market with currency.
Detailed explanation-2: -If a currency appreciates it is more valuable; if a currency depreciates it is less valuable. When an exchange rate changes, the value of one currency will go up while the value of the other currency will go down.
Detailed explanation-3: -A depreciation in the value of the dollar causes the price of imports to rise and the price of exports to fall. As foreign and domestic con-sumers substitute less expensive U.S. goods for now more expensive foreign goods, aggregate demand for U.S.-produced goods and services increases.