Figure 36-8

-Which of the graphs in Figure 36-8 illustrates the AD-AS shifts associated with a currency depreciation?

Question

Figure 36-8
​ 
-Which of the graphs in Figure 36-8 illustrates the AD-AS shifts associated with a currency depreciation?

Quizplus · Accepted Answer

Currency depreciation typically leads to an increase in the price level of imported goods, which can cause the aggregate demand (AD) curve to shift to the right due to increased net exports. It can also lead to higher costs for firms that rely on imported inputs, potentially shifting the short-run aggregate supply (SRAS) curve to the left. Graph 3 is likely to illustrate these shifts.

Figure 36-8 ​

Figure 36-8