Other things equal, an appreciation of the U.S. dollar would
A) increase productivity and increase aggregate supply.
B) decrease net exports and decrease aggregate demand.
C) increase the prices of imported resources and decrease aggregate supply.
D) decrease the supply of money and decrease aggregate demand.

Question

Quizplus · Accepted Answer

An appreciation of the U.S. dollar (an increase in its value relative to other currencies) would make U.S. goods and services more expensive for foreigners and thus decrease U.S. net exports (exports minus imports). This would lead to a decrease in aggregate demand, as net exports are a component of the calculation of the GDP.

Other Things Equal, an Appreciation of the U