If speculators bid up the value of the U.S.dollar in the market for foreign exchange,then
A)U.S.goods become more expensive relative to foreign goods so aggregate demand shifts right.
B)U.S.goods become less expensive relative to foreign goods so aggregate demand shifts right.
C)U.S.goods become more expensive relative to foreign goods so aggregate demand shifts left.
D)U.S.goods become less expensive relative to foreign goods so aggregate demand shifts left.

Question

Quizplus · Accepted Answer

If speculators bid up the value of the U.S. dollar in the foreign exchange market, it means that the U.S. dollar becomes stronger compared to foreign currencies. This makes U.S. goods more expensive relative to foreign goods, which can lead to a decrease in demand for U.S. exports and an increase in demand for imports. As a result, aggregate demand in the U.S. shifts left.

If Speculators Bid Up the Value of the U