If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Question

Quizplus · Accepted Answer

When speculators bid up the value of the dollar, it becomes stronger compared to other currencies. This makes U.S. goods more expensive for foreign buyers, reducing exports. At the same time, imports become cheaper for U.S. consumers, leading to a decrease in domestic production and a shift of the U.S. aggregate demand to the left.

If Speculators Bid Up the Value of the Dollar in the Market