In 2008, the dollar appreciated relative to the euro. This appreciation caused __________and a__________
A) an increase in U.S. exports to Europe; movement up along the U.S. aggregate demand curve
B) a decrease in U.S. exports to Europe; leftward shift in the U.S. aggregate demand curve
C) a decrease in U.S. exports to Europe; a movement up along the U.S. aggregate demand curve
D) a movement up along the U.S. aggregate demand curve; decrease in U.S. exports to Europe

Question

Quizplus · Accepted Answer

An appreciation in the dollar makes U.S. exports more expensive to foreign buyers, causing a decrease in U.S. exports to Europe. This decrease in exports leads to a leftward shift in the U.S. aggregate demand curve.

In 2008, the Dollar Appreciated Relative to the Euro