Figure 20-7

-In Figure 20-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from C to B?
A)a European economic expansion
B)an appreciation of the dollar
C)a depreciation of the dollar
D)an increase in the money supply

Question

Figure 20-7
 
-In Figure 20-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from C to B?
A)a European economic expansion 
B)an appreciation of the dollar 
C)a depreciation of the dollar 
D)an increase in the money supply

Quizplus · Accepted Answer

An appreciation of the dollar would make exports more expensive and imports cheaper, reducing net exports, which would shift the aggregate expenditure function downward from C to B.

Figure 20-7 -In Figure 20-7, There Are Three Aggregate Expenditure Functions (C