National Income and Price Determination

The action could temporarily support the value of the domestic currency but might induce future deficits if not supported by fundamental economic changes.

Selling foreign reserves has no immediate impact on balances but encourages long-term capital inflow stability resulting typically in sustained surpluses.

It triggers systematic depreciation patterns followed invariably with balanced payment equilibrium given altered perceptions regarding monetary policies alone.

The sale results primarily into persistent surpluses across all balances owing exclusively due external confidence created among international investors/traders.

It causes LRAS to shift rightward.

It reduces overall productivity and potential output.

It causes LRAS to shift leftward.

There is no effect on LRAS but on SRAS only.

LRASShiftsLeft2019DueToLaborShortage

The workforce expands increasing potential output.

ThereIsNoImpactOnAggregateSupplyInEitherTheShortOrLongTerm

ProductivityPerWorkerIncreasesLeadingToLowerOutput

It shifts the LRAS to the left due to decreased competitiveness in international markets.

It does not affect LRAS as it is determined by factors like technology, capital, and resources.

It decreases LRAS as it makes exports more expensive and reduces foreign demand for goods.

It increases LRAS by making imports cheaper and increasing consumer purchasing power.

The LRAS would increase

The LRAS would decrease

The LRAS wouldn't change directly, but could influence other GDP factors

The LRAS would remain unchanged

The LRAS curve shifts to the left

The LRAS curve shifts to the right

The LRAS curve becomes flatter

The LRAS curve becomes steeper

No change to LRAS but potential for inflationary pressures.

An increase in real output without any impact on price levels or inflation.

A rightward shift in the LRAS as more resources become productively employed.

A leftward shift in LRAS due to increased interest rates crowding out private investment.

Currency value

Interest rates

Taxes

Import quotas

The total amount of goods and services demanded at different price levels.

The potential output when all resources are used efficiently.

The actual output produced in the short run, given current prices.

The maximum output an economy can produce with existing technology.

Increased productivity has no effect on exchange rates but improves both accounts by boosting competitiveness.

A depreciated exchange rate can result from increased productivity, causing both accounts to trend towards surplus.

Productivity gains lead directly to deficits in both accounts due to higher interest rates attracting foreign capital.

The exchange rate may appreciate, potentially worsening the current account but improving the financial account.