If the dollar appreciates because of speculation or government policy
A) aggregate demand shifts left.If other countries experience recessions,aggregate demand in the U.S.also shifts left.
B) aggregate demand shifts left.If other countries experience recessions,aggregate demand in the U.S.shifts right.
C) aggregate demand shifts right.If other countries experience recessions,aggregate demand in the U.S.shifts left.
D) aggregate demand shifts right.If other countries experience recessions,aggregate demand in the U.S.also shifts right.

Question

Quizplus · Accepted Answer

If the dollar appreciates due to speculation or government policy, it becomes more expensive for foreigners to purchase goods and services from the U.S. This leads to a decrease in exports and a decrease in aggregate demand. If other countries experience recessions, they will also decrease their imports from the U.S., which further lowers aggregate demand in the U.S. Therefore, both factors lead to a leftward shift of the aggregate demand curve.

If the Dollar Appreciates Because of Speculation or Government Policy