A fall in the value of the dollar relative to other currencies will:
A)increase foreign demand for U.S. goods, shifting the U.S. aggregate demand curve to the right.
B)increase foreign demand for U.S. goods, shifting the U.S. aggregate demand curve to the left.
C)decrease foreign demand for U.S. goods, shifting the U.S. aggregate demand curve to the right.
D)decrease foreign demand for U.S. goods, shifting the U.S. aggregate demand curve to the left.

Question

Quizplus · Accepted Answer

When the value of the dollar falls relative to other currencies, U.S. goods become cheaper for foreign buyers, increasing foreign demand for these goods. This increase in demand shifts the U.S. aggregate demand curve to the right, as more goods and services are demanded at every price level.

A Fall in the Value of the Dollar Relative to Other