If the dollar depreciates, both the aggregate demand curve and the aggregate supply curve shift inward.

Question

Quizplus · Accepted Answer

A depreciation in the dollar would result in an increase in the price level due to the increased cost of imported goods, leading to a decrease in real output and a decrease in aggregate demand. However, the aggregate supply curve may shift inward or outward depending on the impact of the exchange rate on domestic producers' costs and competitiveness. Therefore, the statement is false.

If the Dollar Depreciates, Both the Aggregate Demand Curve and the Aggregate