When the dollar depreciates, the prices of imported inputs rise and the U.S.aggregate supply curve, therefore, shifts inward, pushing up the prices of American-made goods and services.

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When the dollar depreciates, it becomes more expensive to purchase imported inputs, which increases the costs of production for American firms. As a result, the aggregate supply curve shifts inward, causing prices of American-made goods and services to increase.

When the Dollar Depreciates, the Prices of Imported Inputs Rise