The Australian exchange rate rises. As a result, there is a
A)movement along the aggregate demand curve but the curve does not shift.
B)leftward shift in the aggregate demand curve.
C)rightward shift in the aggregate demand curve.
D)rightward shift in the long- run aggregate supply curve.

Question

Quizplus · Accepted Answer

A rise in the Australian exchange rate makes exports more expensive and imports cheaper, reducing net exports, which decreases aggregate demand and shifts the curve leftward.

The Australian Exchange Rate Rises