If the dollar falls in value compared to other currencies, what will happen in the United States?
A)a decrease in aggregate demand
B)an increase in aggregate supply
C)a decrease in aggregate supply
D)a decrease in the U.S.price level

Question

If the dollar falls in value compared to other currencies, what will happen in the United States?
A)a decrease in aggregate demand 
B)an increase in aggregate supply 
C)a decrease in aggregate supply 
D)a decrease in the U.S.price level

Quizplus · Accepted Answer

A fall in the dollar's value makes imports more expensive and exports cheaper, leading to higher production costs and a decrease in aggregate supply.

If the Dollar Falls in Value Compared to Other Currencies