Figure 15-1
-Refer to Figure 15-1.Ceteris paribus,an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Question

Figure 15-1 
-Refer to Figure 15-1.Ceteris paribus,an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Quizplus · Accepted Answer

An increase in the value of the domestic currency relative to foreign currencies means that the domestic currency has appreciated. This would cause a decrease in exports and an increase in imports. This would shift the AD curve inwards and to the left, resulting in a movement from AD₂ to AD₁.

Figure 15-1 -Refer to Figure 15-1.Ceteris Paribus,an Increase in the Value of the Value