Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
True
B
False
Understanding the Answer
Let's break down why this is correct
Answer
When the Euro appreciates against the Songland dollar, it means that one Euro can buy more Songland dollars than before. This change makes products from Songland cheaper for people in Eurozone countries, encouraging them to buy more of Songland's goods. As a result, Songland's exports will likely increase because foreign buyers find them more affordable. For example, if a Songland-made toy costs 10 Songland dollars, and the Euro is strong, it might only cost 8 Euros for a buyer in Europe. This increase in exports boosts Songland's overall economic activity, leading to higher aggregate demand in the country.
Detailed Explanation
When the Euro gets stronger, it means it takes more Songland dollars to buy Euros. Other options are incorrect because Some might think that a stronger Euro means Songland's goods are cheaper for everyone.
Key Concepts
Flexible Exchange Rates
Aggregate Demand
International Trade
Topic
Flexible Exchange Rates
Difficulty
easy level question
Cognitive Level
understand
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