If the dollar depreciates in value relative to foreign currencies, then aggregate
A) demand decreases.
B) demand increases.
C) supply and aggregate demand increase.
D) supply and aggregate demand decrease.

Question

Quizplus · Accepted Answer

When the dollar depreciates in value relative to foreign currencies, U.S. goods and services become cheaper for foreign buyers, increasing exports. This leads to an increase in aggregate demand as the overall demand for goods and services in the economy rises.

If the Dollar Depreciates in Value Relative to Foreign Currencies