Question

As the U.S. dollar appreciates, the U.S. ____________ curve shifts _____________ resulting in a(n) _________________ in the U.S. price level and a(n) _________________ in Real GDP in the United States.
a. AD; leftward; decrease; decrease
b. AD; rightward; increase; increasec. SRAS; rightward; decrease; increased.
d. SRAS; leftward; increase; decrease

Answer 1

Answer: a. AD; leftward; decrease; decrease.

Explanation:

If the dollar appreciates (the exchange rate increases), the relative price of domestic goods and services increases while the relative price of foreign goods and services falls. Also, the change in relative prices will decrease U.S. exports and increase its imports.

Aggregate demand shift leftward.