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
.
1 answer
a. decrease
1 answer