Question
In: Economics
If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports
If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports
a. increase which shifts aggregate demand right. b. increase which shifts aggregate demand left. c. decrease which shifts aggregate demand right. d. decrease which shifts aggregate demand left.
Solutions
Expert Solution
Answer : The answer is option d.
When currency appreciate then export decrease and import increase. As a result, the net export decrease. When net export decrease then the aggregate demand decrease which shift the aggregate demand curve to leftward. Therefore, option d is correct.
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