If the Central Reserve Bank of Peru (the Peruvian central bank)were to take steps to devalue the sol (the Peruvian currency)in foreign currency markets,the Peruvian aggregate demand curve would ________ in the short run,and the Peruvian short-run aggregate supply curve would ________ in the long run.

Question

Quizplus · Accepted Answer

Devaluing the sol makes Peruvian exports cheaper and imports more expensive, increasing aggregate demand in the short run. In the long run, higher import costs can lead to increased production costs, shifting the short-run aggregate supply curve leftward.

If the Central Reserve Bank of Peru (The Peruvian Central