Dollar depreciation lowers United States Real GDP when the _____________ shift of the SRAS curve exceeds the __________ shift of the AD curve.

Question

Quizplus · Accepted Answer

When the dollar depreciates, it increases the price of imported goods and services, which can cause a leftward shift of the SRAS curve due to the increased costs of production. If this leftward shift in the SRAS curve exceeds the rightward shift in the AD curve caused by increased exports due to the cheaper dollar, then the result would be a decrease in real GDP. Therefore, the correct answer is C (leftward shift of the SRAS curve and rightward shift of the AD curve).

Dollar Depreciation Lowers United States Real GDP When the _____________