In the aggregate demand and aggregate supply model, when does the aggregate quantity of goods demanded increase?
A) when real wealth falls
B) when the interest rate rises
C) when the dollar depreciates
D) when stock prices decrease

Question

Quizplus · Accepted Answer

When the dollar depreciates, foreign goods become relatively more expensive compared to domestic goods, which increases the demand for domestic goods and leads to an increase in the aggregate quantity of goods demanded. Real wealth, interest rates, and stock prices can all affect consumer and business behavior, but they do not directly impact the aggregate quantity of goods demanded in the same way as a change in the exchange rate.

In the Aggregate Demand and Aggregate Supply Model, When Does