All other things unchanged, an increase in the value of the dollar against the euro
A) increases U.S. net exports and shifts the investment demand curve to the right.
B) decreases U.S. net exports and shifts the investment demand curve to the left.
C) increases U.S. net exports and shifts the aggregate demand curve to the right.
D) decreases U.S. net exports and shifts the aggregate demand curve to the left.

Question

Quizplus · Accepted Answer

An increase in the value of the dollar makes U.S. goods more expensive for foreign buyers and foreign goods cheaper for U.S. buyers, leading to a decrease in U.S. net exports. This decrease in net exports reduces aggregate demand, shifting the aggregate demand curve to the left.

All Other Things Unchanged, an Increase in the Value of the Dollar