How would the real exchange rate need to change to get aggregate expenditure to increase?
A) Increase
B) Decrease
C) Remain constant
D) Exchanges rates don't generally affect aggregate expenditure.

Question

Quizplus · Accepted Answer

A decrease in the real exchange rate makes domestic goods cheaper relative to foreign goods, increasing exports and reducing imports, which can lead to an increase in aggregate expenditure.

How Would the Real Exchange Rate Need to Change to Get