If the Canadian dollar increases in value relative to other currencies, how does this affect the aggregate demand curve?
A)This will move the economy up along a stationary aggregate demand curve.
B)This will move the economy down along a stationary aggregate demand curve.
C)This will shift the aggregate demand curve to the left.
D)This will shift the aggregate demand curve to the right.
E)This will shift the aggregate supply curve to the left as the result of foreign direct investment.

Question

Quizplus · Accepted Answer

An increase in the value of the Canadian dollar leads to a decrease in net exports as Canadian goods become more expensive for foreign consumers, causing a decrease in aggregate demand. This will shift the aggregate demand curve to the left.

If the Canadian Dollar Increases in Value Relative to Other