The U.S. exchange rate rises. As a result, there is a
A) movement along the U.S. aggregate demand curve but the curve does not shift.
B) leftward shift in the U.S. aggregate demand curve.
C) rightward shift in the U.S. aggregate demand curve.
D) rightward shift in the long- run U.S. aggregate supply curve.

Question

Quizplus · Accepted Answer

A rise in the U.S. exchange rate makes U.S. goods more expensive for foreign buyers, reducing exports and shifting the aggregate demand curve leftward.

The US Exchange Rate Rises