The exchange rate last month was $1= 1 Swiss francs. This month it is $1 = 0.95 Swiss francs. We can say that the value of the dollar
A) fell, causing net exports to increase and aggregate demand to rise.
B) fell, causing net exports to decrease and aggregate demand to fall.
C) increased, causing net exports to decrease and aggregate demand to fall.
D) increased, causing net exports to decrease and aggregate demand to rise.

Question

Quizplus · Accepted Answer

The dollar fell in value because it now exchanges for fewer Swiss francs. A weaker dollar makes U.S. goods cheaper for foreign buyers, increasing net exports and aggregate demand.

The Exchange Rate Last Month Was $1= 1 Swiss Francs