Suppose the euro appreciates against the dollar. This causes U.S. exports to become less expensive for consumers in the European Union, which would likely cause the U.S.
A) aggregate supply to shift leftward.
B) aggregate supply to shift rightward.
C) aggregate demand to shift leftward.
D) aggregate demand to shift rightward.

Question

Quizplus · Accepted Answer

An appreciation of the euro against the dollar would mean that the dollar is weaker against the euro. This means that exports from the U.S. become cheaper for consumers in the European Union, which would likely lead to an increase in demand for U.S. goods. This increase in demand would cause the aggregate demand for the U.S. to shift rightward.

Suppose the Euro Appreciates Against the Dollar