Figure 20-8

-Which of the graphs in Figure 20-8 represents the effects of a currency appreciation?
A)1
B)2
C)3

Question

Figure 20-8
 
-Which of the graphs in Figure 20-8 represents the effects of a currency appreciation?
A)1 
B)2 
C)3

Quizplus · Accepted Answer

Currency appreciation means that the domestic currency becomes more valuable relative to foreign currencies. This means that domestic goods and services become more expensive for foreigners to buy, and foreign goods and services become cheaper for domestic residents to buy. This will lead to a decrease in exports and an increase in imports, which is represented by a shift of the aggregate demand curve to the left.

Figure 20-8 -Which of the Graphs in Figure 20-8 Represents the Effects