A sudden decline in the international value of the dollar that dramatically increases the demand for American goods is an example of

Question

Quizplus · Accepted Answer

An aggregate demand shock traceable to a shift in the IS curve is correct because a decline in the international value of the dollar making American goods more attractive to foreign buyers would increase demand for these goods, impacting the overall demand in the economy. This is represented by a shift in the IS curve, which shows the relationship between interest rates and levels of income that are consistent with equilibrium in the goods market.

A Sudden Decline in the International Value of the Dollar