Question

Suppose​ that, initially, the U.S. economy was in an aggregate​ demand-aggregate supply equilibrium at point A along the aggregate demand curve AD in the diagram.​ Now, however, the value of the U.S. dollar has suddenly appreciated relative to foreign currencies. This appreciation happens to have no measurable effects on either the​ short-run or the​ long-run aggregate supply curve in the United States. It​ does, however, influence U.S. aggregate demand.

a. As a result of the dollar​ appreciation, U.S. net export expenditures will
a. decrease
b.increase
c.remain unchanged

.

Answer 1

a. decrease