Multiple Choice
increases aggregate demand in the United States and may increase aggregate supply by reducing the prices of imported resources.
increases aggregate demand in the United States and may decrease aggregate supply by reducing the prices of imported resources.
decreases aggregate demand in the United States and may increase aggregate supply by reducing the prices of imported resources.
decreases aggregate demand in the United States and may reduce aggregate supply by increasing the prices of imported resources.
1 answer
The correct answer is:
decreases aggregate demand in the United States and may increase aggregate supply by reducing the prices of imported resources.
When the dollar appreciates, it makes U.S. goods more expensive for foreign buyers, which tends to decrease aggregate demand. At the same time, an appreciation of the dollar makes imports cheaper, potentially leading to a decrease in prices for imported resources, which can increase aggregate supply.
