Author Question: Give 4 examples of situations that would cause the DD-curve to shift to the left. What will be an ... (Read 89 times)

laurencescou · **on:** Jun 30, 2018

Give 4 examples of situations that would cause the DD-curve to shift to the left.

What will be an ideal response?

Question 2

Which one of the following possibilities is TRUE?

A) Much of eurocurrency trading occurs in Europe.
B) Much of eurocurrency trading occurs in the United States.
C) Eurocurrencies trading occurs everywhere except the United States.
D) Eurocurrencies trading occurs everywhere except Europe.
E) Eurocurrencies trading occurs everywhere except China.

ryhom · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Correct answers include any situations that involve:
(1 ) an decrease in government spending (e.g., decrease in military spending)
(2 ) an increase in taxes
(3 ) a fall in Investment demand
(4 ) a price increase, which would lower net export demand (assuming E and P stay constant)
(5 ) a fall in foreign prices (assuming E and P stay constant)
(6 ) an autonomous fall in consumption demand (as long as it is not entirely a change in import demand)
(7 ) a shift to demanding more foreign goods at the expense of domestic good demand

Answer to Question 2

C