Author Question: An appreciation in the U.S. dollar benefits which of the following groups of people? a. All people ... (Read 66 times)

Tirant22 · **on:** Jun 30, 2018

An appreciation in the U.S. dollar benefits which of the following groups of people?
a. All people living in the United States
b. U.S. producers who export farm equipment to other countries
c. U.S. consumers who buy imported automobiles
d. Foreigners who wish to travel to the United States
e. U.S. consumers who buy only goods made entirely in the United States

Question 2

Explain how changes in wealth, the price level, interest rates, and expectations alter the consumption curve.

Eunice618 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

c

Answer to Question 2

An increase in wealth increases consumption at each level of disposable income (shifts the consumption curve upward). A rise in the price level reduces the real value of assets. This reduction in wealth reduces consumption at each level of income (shifts the consumption curve downward). An increase in interest rates the reward for saving and discourages borrowers from securing current spending power. An increase in interest rates, therefore, will shift the consumption curve downward. A rise in price expectations may encourage more households to buy now to beat the expected price increase regardless of their current disposable income (shifts the consumption curve upward).