In the short-run,any rise in the real exchange rate,EP /P,will cause
A)an upward shift in the aggregate demand function and a reduction in output.
B)an upward shift in the aggregate demand function and an expansion of output.
C)a downward shift in the aggregate demand function and an expansion of output.
D)an downward shift in the aggregate demand function and a reduction in output.
E)an upward shift in the aggregate demand function but leaves output intact.

Question

In the short-run,any rise in the real exchange rate,EP  /P,will cause
A)an upward shift in the aggregate demand function and a reduction in output. 
B)an upward shift in the aggregate demand function and an expansion of output. 
C)a downward shift in the aggregate demand function and an expansion of output. 
D)an downward shift in the aggregate demand function and a reduction in output. 
E)an upward shift in the aggregate demand function but leaves output intact.

Quizplus · Accepted Answer

The Answer of In the short-run,any rise in the real exchange rate,EP  /P,will cause
A)an upward shift in the aggregate demand function and a reduction in output. 
B)an upward shift in the aggregate demand function and an expansion of output. 
C)a downward shift in the aggregate demand function and an expansion of output. 
D)an downward shift in the aggregate demand function and a reduction in output. 
E)an upward shift in the aggregate demand function but leaves output intact.

In the Short-Run,any Rise in the Real Exchange Rate,EP