Learning Goal: I’m working on a macro economics writing question and need suppor

Learning Goal: I’m working on a macro economics writing question and need support to help me learn.MULTIPLE CHOICE SECTION (20 points, 2 points each):1) A currency appreciation is disinflationary and contractionary if thea. inward shift of the aggregate demand curve due to the fall in exports exceeds the outward shift of the aggregate supply curve due to lower input prices.b. outward shift of the aggregate demand curve due to the rise in exports exceeds the outward shift of the aggregate supply curve due to lower input prices.c. outward shift of the aggregate demand curve due to the fall in exports exceeds the inward shift of the aggregate supply curve due to higher input prices.d. inward shift of the aggregate demand curve due to lower input prices exceeds the outward shift of the aggregate supply curve due to the rise in exports.2) If a currency depreciates, a country’s net exportsa. fall and AD increases.b. rise and AD increases.c. fall and AD decreases.d. rise and AD decreases. 3) An equilibrium point where actual output is beyond the potential GDP is termed asa.deflationary gap.b.recessionary gap.c.expansionary gap.d.acceleration gap 4) When total expenditures exceed the economy’s potential GDP, the proper fiscal policy is toa.increase transfer payments to the poor and elderly.b.cut personal income tax rates.c.decrease government purchases.d.increase purchasing power. 5) One of the justifications of government stabilization policy is that it maya.increase the fluctuations in inflation and employment.b.increase the multiplier effect of changes in autonomous spending.c.increase the volatility of economic variables.d.reduce the severity of inflation and unemployment.6) Booms and recessions are transmitted to other countries. (T/F)7) A recession abroad would cause U.S. net exports to rise. (T/F)8) An economic boom in the United States would cause the aggregate demand curve in other countries to shift outward. (T/F)9) A decrease in the price level in Japan will shift the U.S. aggregate demand curve outward. (T/F)10) The depreciation of the Japanese yen would ease their problems with regard to recession. (T/F)SHORT ANSWER SECTION (80 points):Question 1 (20 points)In each of the following scenarios, explain why the euro will appreciate or depreciate in a system of floating exchange rates. A) A recession in Germany cuts German purchases of American goods. B) American investors are attracted by prospects for profit on the Frankfurt Stock Exchange. C) Interest rates on government bonds rise in the U.S. but remain stable in Germany.ANSWER: Question 2: (20 points)Why is currency depreciation inflationary and expansionary?ANSWER:Question 3: (20 points)Please explain how the Fed has stabilized the economy in the 80s using the appropriate graphs. Why did they adopt the particular policy? Can you identify any challenges associated with implementing this policy?ANSWER:Question 4: (20 points)Please describe how monetary policy affects exchange rates.ANSWER:

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