If the dollar appreciates and the U.S.AD curve shifts leftward by an amount greater than the U.S.SRAS curve shifts rightward,then Real GDP will _____________________ and the price level will _____________________.

Question

Quizplus · Accepted Answer

If the U.S.AD curve shifts leftward by an amount greater than the U.S.SRAS curve shifts rightward, it means that aggregate demand has decreased more than aggregate supply has increased. This will lead to a decrease in Real GDP, as the decrease in aggregate demand will cause a decrease in both output and prices. The price level will also decrease because of the decrease in aggregate demand, as firms will have to lower prices to sell their output. Therefore, choice A is the correct answer.

If the Dollar Appreciates and the U