Figure 24-1 -Refer to Figure 24-1. Ceteris paribus, an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from A) AD₁ to AD₂. B) AD₂ to AD₁. C) point A to point B. D) point B to point A.

Question

Quizplus · Accepted Answer

An increase in the value of the domestic currency makes exports more expensive and imports cheaper, reducing net exports and shifting aggregate demand from AD₂ to AD₁.

Figure 24-1 -Refer to Figure 24-1. Ceteris Paribus, an Increase in the Increase