If the Australian dollar increases in value relative to other currencies, how does this affect the aggregate demand curve, ceteris paribus?
A)This will move the economy up along a stationary aggregate demand curve.
B)This will move the economy down along a stationary aggregate demand curve.
C)This will shift the aggregate demand curve to the left.
D)This will shift the aggregate demand curve to the right.

Question

Quizplus · Accepted Answer

When the Australian dollar increases in value relative to other currencies, Australian goods become more expensive for foreign buyers, leading to a decrease in exports. This decrease in exports reduces the overall demand for Australian goods and services, thus shifting the aggregate demand curve to the left, ceteris paribus.

If the Australian Dollar Increases in Value Relative to Other