When the exchange increases so that the value of the dollar rises, then the
A) LAS curve shifts rightward.
B) AD curve shifts leftward.
C) LAS curve shifts leftward.
D) AD curve shifts rightward.

Question

Quizplus · Accepted Answer

When the exchange rate increases and the value of the dollar rises, it means that foreign goods are relatively cheaper compared to domestic goods. This leads to a decrease in the quantity of domestic goods demanded by foreigners, which results in a leftward shift of the AD curve.

When the Exchange Increases So That the Value of the Dollar