Figure 36-7

-In Figure 36-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from C to B?
A)A European economic expansion
B)An appreciation of the dollar
C)A depreciation of the dollar
D)An increase in the money supply

Question

Figure 36-7
​ 
-In Figure 36-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from C to B?
A)A European economic expansion 
B)An appreciation of the dollar 
C)A depreciation of the dollar 
D)An increase in the money supply

Quizplus · Accepted Answer

An appreciation of the dollar would make exports more expensive and imports cheaper, decreasing net exports (X-IM), and shifting the aggregate expenditure function down and to the left from C to B.

Figure 36-7 ​

Figure 36-7