Figure 15-1 -Refer to Figure 15-1.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

Quizplus · Accepted Answer

An increase in the value of the domestic currency relative to foreign currencies means that the domestic currency has appreciated. This would cause a decrease in exports and an increase in imports. This would shift the AD curve inwards and to the left, resulting in a movement from AD₂ to AD₁.

Figure 15-1 -Refer to Figure 15-1.Ceteris Paribus,an Increase in the Value of the Value