Question

5. A depreciation of the U.S. exchange rate induces U.S. consumers to buy

1. fewer domestic goods and fewer foreign goods.
2. more domestic goods and more foreign goods.
3. more domestic goods and fewer foreign goods.
4. fewer domestic goods and more foreign goods.

6. Other things the same, if the exchange rate changes from 2.3 Dinar per dollar to 7.6 Dinar per dollar, then the dollar

1. depreciates which causes US net exports to increase.
2. appreciates, which causes US net exports to decrease.
3. depreciates which causes US net exports to decrease.
4. appreciates which causes US net exports to increase.

7. Other things the same, if the exchange rate changes from 7.6 Dinar per dollar to 2.3 Dinar per dollar, then the dollar

1. depreciates, which causes AD to shift right.
2. appreciates, which causes AD to shift left.
3. depreciates, which causes AD to shift left.
4. appreciates which causes AD to shift right.

8. Other things the same, if the exchange rate changes from 2.3 Dinar per dollar to 7.6 Dinar per dollar, then as a result

1. AD shifts right.
2. AD is unaffected.
3. AD shifts left.

9. Other things the same, if the exchange rate changes from 7.6 Dinar per dollar to 2.3 Dinar per dollar, then as a result

1. AD shifts right.
2. AD is unaffected.
3. AD shifts left.

Answer 1

5. more domestic goods and fewer foreign goods.
(As currency depreciates, foreign goods become expensive so less foreign goods and more domestic goods are purchased.)

6. appreciates, which causes US net exports to decrease.
(Value of a dollar is increasing so it appreciates which increases its imports and reduces exports so net exports decrease.)

7. depreciates, which causes AD to shift right.
(Value of a dollar is decreasing so it depreciates which increases its exports and reduces imports so net exports increase and thereby AD also increases causing the shift to the right.)

8. AD shifts left.
(In this case, net exports decline so AD decreases and shift to the left.)

9. AD shifts right.
(In this case, net exports increase so AD increases and shift to the right.)