When the exchange rate appreciates, the aggregate demand curve shifts to the right causing an increase in real GDP.

Name: When the exchange rate appreciates, the aggregate demand curve shifts to the right causing an increase in real GDP.
Brand: Quizplus
Rating: 5.0 (34 reviews)

Question

Quizplus · Accepted Answer

When the exchange rate appreciates, it makes domestic goods more expensive relative to foreign goods, reducing exports and increasing imports, which can decrease aggregate demand and potentially lower real GDP.

When the Exchange Rate Appreciates, the Aggregate Demand Curve Shifts