What economic impact would the closing of a nearby military base ...

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What economic impact would the closing of a nearby military base have on a town? Would people and businesses that did not directly deal with the military personnel be affected?
 
  What will be an ideal response?

Question 2

A real appreciation of the dollar is caused by either a nominal appreciation of the dollar, a rise in the foreign price level, or a fall in the U.S. price level.
 
  Indicate whether the statement is true or false

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Answer to Question 1

Through the multiplier effect, the closing of the military base would have a large effect on the town. The businesses that sold directly to the military personnel would lose sales, resulting in declining profits and layoffs. With less income, these business owners and workers would buy less goods and services from other businesses in town, which would drop the income of the owners and workers in the other businesses. With less income, they would also decrease their spending and the multiplier effect would spread through the town.

Answer to Question 2

FALSE

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Thank you

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No problemo