Which set of events would most likely increase aggregate demand?
A. An increase in incomes in foreign nations and a depreciation of the dollar.
B. A decrease in incomes in foreign nations and an appreciation of the dollar.
C. A decrease in incomes in foreign nations and a depreciation of the dollar.
D. An increase in incomes in foreign nations and an appreciation of the dollar.
Answer: A
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The multiplier represents the ratio of the total shift in aggregate demand to the
A) initial shift in aggregate demand. B) total shift in long-run aggregate supply. C) initial shift in short-run aggregate supply. D) total shift in short-run aggregate supply.
Which of the following is an appropriate policy for the Fed to pursue if it wants to increase the money supply?
A) raise the reserve requirement B) raise the discount rate C) buy U.S. Treasury bills D) lower taxes