In 2008, the dollar appreciated relative to the euro. This appreciation caused ________ and a ________.
A) a movement up along the U.S. aggregate demand curve; decrease in U.S. exports to Europe
B) a decrease in U.S. exports to Europe; leftward shift in the U.S. aggregate demand curve
C) an increase in U.S. exports to Europe; movement up along the U.S. aggregate demand curve
D) a decrease in U.S. exports to Europe; a movement up along the U.S. aggregate demand curve

Question

Quizplus · Accepted Answer

When the dollar appreciates relative to the euro, U.S. goods become more expensive for Europeans, leading to a decrease in U.S. exports to Europe. This decrease in exports reduces the overall demand for U.S. goods and services, causing a leftward shift in the U.S. aggregate demand curve.

In 2008, the Dollar Appreciated Relative to the Euro