An appreciation of the dollar makes imported inputs cheaper and shifts the U.S.aggregate supply curve outward, thus pushing American prices down.

Question

Quizplus · Accepted Answer

An appreciation of the dollar lowers the cost of imported inputs, which leads to a decrease in the cost of production and a shift of the aggregate supply curve to the right. This, in turn, leads to lower prices and an increase in real output.

An Appreciation of the Dollar Makes Imported Inputs Cheaper and Shifts