An increase in net exports due to a change in the exchange rate will shift aggregate demand

Question

Quizplus · Accepted Answer

An increase in net exports due to a change in the exchange rate means that the country's exports have become cheaper for foreign buyers, increasing demand for exports and therefore increasing net exports. This increase in net exports will shift aggregate demand to the right by the initial amount multiplied by the multiplier (F1F1F1S1 x F1F1F10). Thus, the correct choice is D.

An Increase in Net Exports Due to a Change in the Exchange