Suppose an appreciation of the French franc causes U.S. prices of French wine imports to rise sharply. On the other hand, Californian wine becomes relatively inexpensive to French consumers. Other things equal, this will result in:
a. an increase in U.S. aggregate expenditures and an increase in the aggregate quantity of U.S. goods and services demanded.
b. a decrease in U.S. aggregate expenditures and a decrease in the aggregate quantity of U.S. goods and services demanded.
c. an increase in U.S. aggregate expenditures and a decrease in the aggregate quantity of U.S. goods and services demanded.
d. no change in either U.S. aggregate expenditures or the aggregate quantity of U.S. goods and services demanded.
e. a decrease in U.S. aggregate expenditures and an increase in the aggregate quantity of U.S. goods and services demanded.
Question 2
If there is a decrease in demand
a. firms would be willing to supply less of the good than before at each possible price.
b. buyers are willing to purchase less of the good than before at each possible price.
c. buyer's taste for the good has increased.
d. the price of the product has increased, causing consumers to buy less of the product.
Gasoline prices
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