The dollar has appreciated against the currencies of many of the U. S.'s top trading partners. What outcome could this fall in foreign price levels have on aggregate demand

Question

Olivia Taylor

Business

10 December, 16:56

The dollar has appreciated against the currencies of many of the U. S.'s top trading partners. What outcome could this fall in foreign price levels have on aggregate demand

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Answers (2)

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Mya Hahn · Answer 1

Answer: Aggregate demand would shift to the left due to a decrease in US exports.

Explanation When the dollar appreciated against foreign currencies, U. S. goods and services become relatively more expensive, reducing exports and boosting imports in the United States. Such a reduction in net exports reduces aggregate demand.

Zachary · Answer 2

The aggregate demand will fall.

Explanation:

The appreciation of currency makes import cheaper and export costlier. For example, a stronger dollar can buy more commodities from a foreign nation. Conversely, the foreign nation won't be able to buy more commodities from the U. S. thus, the export will fall in the U. S. and imports will increase. So, a fall in net export results in a fall in aggregate demand.