Figure 24-1
-Refer to Figure 24-1.Ceteris paribus,an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from
A)AD1 to AD2.
B)AD2 to AD1.
C)point A to point B.
D)point B to point A.

Question

Figure 24-1 
-Refer to Figure 24-1.Ceteris paribus,an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from
A)AD1 to AD2. 
B)AD2 to AD1. 
C)point A to point B. 
D)point B to point A.

Quizplus · Accepted Answer

An increase in the value of the domestic currency relative to foreign currencies would lead to a decrease in exports, an increase in imports, and a decrease in aggregate demand. This would cause a shift from AD1 to AD2, which represents a decrease in aggregate demand. Therefore, the correct choice is B.

Figure 24-1 -Refer to Figure 24-1.Ceteris Paribus,an Increase in the Value of the Value