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.
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.
How does currency appreciation affect exports?
Exports become more expensive, decreasing demand.
How does currency depreciation affect imports?
Imports become more expensive, decreasing demand.
How does currency depreciation affect exports?
Exports become cheaper, increasing demand.
How does currency appreciation affect imports?
Imports become cheaper, increasing demand.
How does a strong economy affect currency value?
It can lead to currency appreciation due to higher demand.
How does high inflation affect currency value?
It can lead to currency depreciation due to decreased demand.
If the peso appreciates, what happens to Mexican goods for foreigners?
Mexican goods become more expensive, decreasing exports.
If the Canadian dollar depreciates, what happens to Canadian goods for foreigners?
Canadian goods become cheaper, increasing exports.
How does decreased net exports affect aggregate demand?
It leads to a decrease in aggregate demand.
How does increased net exports affect aggregate demand?
It leads to an increase in aggregate demand.