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AP® Macroeconomics

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Impact of a Recession on Foreign Exchange Market

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If the United States economy were to enter into a severe recession, what would be the impact on US aggregate demand, US real gross domestic product, and the international value of the dollar?

A

US aggregate demand increases; US real GDP increases, international dollar value increases.

B

US aggregate demand decreases; US real GDP decreases, international dollar value decreases.

C

US aggregate demand decreases; US real GDP decreases, international dollar value increases.

D

US aggregate demand increases; US real GDP decreases, international dollar value increases.

E

US aggregate demand increases; US real GDP decreases, international dollar value increases.