How does Canadian aggregate demand change if the dollar appreciates or other countries experience recessions?
A) Aggregate demand shifts right.
B) Aggregate demand shifts left.
C) If the dollar appreciates, aggregate demand shifts right; if other countries experience recessions, aggregate demand shifts left.
D) If the dollar appreciates, aggregate demand shifts left; if other countries experience recessions, aggregate demand shifts right.

Question

Quizplus · Accepted Answer

If the Canadian dollar appreciates, Canadian exports become more expensive and less attractive to foreign buyers, leading to a decrease in exports and a decrease in aggregate demand. Similarly, if other countries experience recessions, their demand for Canadian exports decreases, leading to a decrease in exports and a decrease in aggregate demand. Both of these factors result in a leftward shift of the aggregate demand curve.

How Does Canadian Aggregate Demand Change If the Dollar Appreciates