ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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consumers feeling wealthier and and decrease in the costs of production.
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interest rates rising and the government adds several new regulations.
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a decrease in government spending.
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the dollar value depreciating and an increase in the costs of production.
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Detailed explanation-1: -A variety of economic factors can contribute to depreciating the U.S. dollar. These include monetary policy, rising prices or inflation, demand for currency, economic growth, and export prices.
Detailed explanation-2: -A depreciation of the rand against the dollar worsens the current account in the balance of payments and reduces domestic prices.
Detailed explanation-3: -"This will reduce South Africa’s exports while the demand for imports will rise, the demand for foreign currency will increase, foreign currency will become relatively scarce and more expensive, and the rand will depreciate against other currencies, ” the Reserve Bank explained.
Detailed explanation-4: -In an idealised example, when interest rates rise, investors are attracted to a currency and invest in it more heavily. As more investors are attracted, demand for the currency increases, and its value goes up. These flows of investment are known in economics as ‘hot money flows’.