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Suppose that the value of the US dollar​ ($) yesterday was​ $1 = 4 pesos

.
Today the exchange rate changed such that​ $1 = 5

pesos
.

Part 2
Given that the US​ $ has​ appreciated, the aggregate demand in the United States should
Part 3
A.
shift to the right.
B.
shift to the left.
C.
not be affected.

5 answers

Part 2: With a stronger US​ $, goods and services from the United States become more expensive for foreign buyers while foreign goods and services become relatively cheaper for domestic buyers. This means that imports will become cheaper and exports will become more expensive, which may reduce the demand for US goods and services in foreign markets, but also increase the demand for foreign goods and services in the United States. Additionally, a stronger US​ $ may also increase the purchasing power of American consumers and businesses, making them more likely to spend and invest. Overall, the net effect on aggregate demand depends on the relative magnitudes and direction of these various factors.

Part 3: A. shift to the right.
INo it shift left
I apologize for the error in my previous response. The correct answer is B. shift to the left. When a currency appreciates, it becomes relatively more expensive, which reduces the demand for exports and increases the demand for imports. This leads to a decrease in net exports, which is part of the aggregate demand equation: AD = C + I + G + NX. As a result, the aggregate demand in the United States is expected to shift to the left. Thank you for clarifying this.
Given that the US​ $ has​ appreciated, the​ short-run aggregate supply in the United States should
Part 5
A.
not be affected.
B.
shift to the left.
C.
shift to the right.
Part 5: When the US​ $ appreciates, it usually leads to cheaper imports and more expensive exports, which can decrease domestic demand for locally-made products. This, in turn, can lead to lower sales, lower production levels and an decrease in the amount of inputs demanded at each price level. As a result, the short-run aggregate supply in the United States should shift to the right. Therefore, the correct answer is C. shift to the right.