All Flashcards
How do tariffs on Canadian goods affect the Canadian dollar?
Tariffs decrease demand for Canadian dollars, causing depreciation.
How does a decrease in demand for a country's currency affect its exchange rate?
It leads to currency depreciation.
How does an increase in demand for a country's currency affect its exchange rate?
It leads to currency appreciation.
What is the impact of currency appreciation on domestic industries?
It makes their exports more expensive, potentially harming their competitiveness.
What is the impact of currency depreciation on domestic industries?
It makes their exports cheaper, potentially boosting their competitiveness.
How do higher interest rates affect a country's currency?
They can lead to currency appreciation by attracting foreign investment.
How do lower interest rates affect a country's currency?
They can lead to currency depreciation by discouraging foreign investment.
How does government intervention in the foreign exchange market affect currency values?
It can be used to influence currency values, but its effectiveness varies.
What is the effect of trade agreements on currency values?
They can influence currency values by affecting the demand for a country's goods and services.
How does quantitative easing affect a country's currency?
It can lead to currency depreciation by increasing the money supply.
What does a rightward shift of the AD curve indicate?
An increase in aggregate demand, potentially due to increased net exports.
What does a leftward shift of the AD curve indicate?
A decrease in aggregate demand, potentially due to decreased net exports.
On an AD/AS graph, what happens to the price level when AD shifts right?
The price level increases.
On an AD/AS graph, what happens to output when AD shifts right?
Output (real GDP) increases.
On an AD/AS graph, what happens to the price level when AD shifts left?
The price level decreases.
On an AD/AS graph, what happens to output when AD shifts left?
Output (real GDP) decreases.
How are the axes labeled on an AD/AS graph?
Price Level (vertical), Real GDP (horizontal).
What does the AD curve represent?
The total quantity of goods and services demanded at different price levels.
What does the AS curve represent?
The total quantity of goods and services supplied at different price levels.
How does an increase in net exports shift the AD curve?
It shifts the AD curve to the right.
What is currency appreciation?
A country's currency becomes stronger relative to others.
What is currency depreciation?
A country's currency becomes weaker relative to others.
Define net exports.
Exports minus imports.
What does 'stronger currency' mean?
Your money buys more stuff in other countries.
What does 'weaker currency' mean?
Your money buys less stuff in other countries.
Define aggregate demand (AD).
The total demand for goods and services in an economy at a given price level and time period.
What is a trade deficit?
When a country's imports exceed its exports.
What is a trade surplus?
When a country's exports exceed its imports.
Define exports.
Goods and services produced domestically and sold to other countries.
Define imports.
Goods and services produced in other countries and purchased domestically.