When the U.S.dollar appreciates,
A)U.S.exports rise.
B)U.S.imports decline.
C)aggregate demand shifts inward.
D)aggregate demand shifts outward.

Question

Quizplus · Accepted Answer

When the U.S. dollar appreciates, it becomes stronger relative to other currencies. This makes U.S. goods more expensive for foreign buyers, potentially reducing exports. It also makes foreign goods cheaper for U.S. consumers, potentially increasing imports. Both of these effects can lead to a decrease in net exports, which is a component of aggregate demand. Therefore, aggregate demand may shift inward as a result of the appreciation of the U.S. dollar.

When the U.S.dollar Appreciates