All Flashcards
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.
Appreciation vs. Depreciation: Impact on export prices?
Appreciation: export prices rise. Depreciation: export prices fall.
Appreciation vs. Depreciation: Impact on import prices?
Appreciation: import prices fall. Depreciation: import prices rise.
Appreciation vs. Depreciation: Impact on net exports?
Appreciation: net exports decrease. Depreciation: net exports increase.
Appreciation vs. Depreciation: Impact on Aggregate Demand?
Appreciation: AD decreases. Depreciation: AD increases.
Exports vs. Imports: Which increases Aggregate Demand?
Exports increase AD, Imports decrease AD.
Trade Surplus vs. Trade Deficit: Which increases Net Exports?
Trade Surplus increases Net Exports, Trade Deficit decreases Net Exports.
Appreciation vs. Depreciation: Impact on domestic output?
Appreciation: output decreases. Depreciation: output increases.
Appreciation vs. Depreciation: Impact on domestic unemployment?
Appreciation: unemployment increases. Depreciation: unemployment decreases.
Appreciation vs. Depreciation: Impact on domestic price level?
Appreciation: price level decreases. Depreciation: price level increases.
Exports vs. Imports: Which one represents outflow of domestic currency?
Imports represent outflow of domestic currency.
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.