An appreciation of the U.S.dollar against foreign currencies tends to __________ U.S.net exports and shift the U.S.AD curve to the __________.
A) raise; right
B) raise; left
C) lower; right
D) lower; left

Question

Quizplus · Accepted Answer

An appreciation of the U.S. dollar makes American goods more expensive for foreign buyers, which leads to a decrease in exports, and this results in lower net exports. Moreover, it leads to an increase in imports, which displaces domestic production further. This shifts the U.S. AD curve to the left. Therefore, the best choice is D.

An Appreciation of the U