If currency depreciates,
A)net exports rise and the aggregate demand curve shifts inward.
B)net exports rise and the aggregate demand curve shifts outward.
C)net exports fall and the aggregate demand curve shifts inward.
D)net exports fall and the aggregate demand curve shifts outward.

Question

Quizplus · Accepted Answer

When a currency depreciates, the country's goods and services become cheaper for foreigners, leading to an increase in net exports. This increase in net exports raises the aggregate demand, causing the aggregate demand curve to shift outward.

If Currency Depreciates