Which of the following is the MOST accurate?
A) Any disturbance that lowers aggregate demand for domestic output shifts the DD schedule to the right.
B) Any disturbance that lowers aggregate demand for foreign output shifts the DD schedule to the left.
C) Any disturbance that raises aggregate demand for domestic output shifts the DD schedule to the right.
D) Any disturbance that raises aggregate demand for domestic output shifts the DD schedule to the left.
E) Any disturbance that lowers aggregate demand for domestic output shifts the DD schedule downward.

Question

Quizplus · Accepted Answer

The DD schedule represents the relationship between the exchange rate and output when the goods market is in equilibrium. A disturbance that raises aggregate demand for domestic output would increase the demand for domestic goods, leading to an outward (rightward) shift of the DD schedule as the economy can support a higher level of output at each exchange rate.

Which of the Following Is the MOST Accurate