Suppose the Dollar Depreciates in Value in the Foreign Exchange

question 134

Multiple Choice

Suppose the dollar depreciates in value in the foreign exchange markets. What is the impact on U.S.Real GDP?

• A) It rises because dollar depreciation shifts the U.S. AD curve rightward.
• B) It falls because dollar depreciation shifts the U.S. SRAS curve leftward.
• C) There is no effect on Real GDP since dollar depreciation does not affect either the U.S. AD or the U.S. SRAS curve.
• D) It depends on whether the U.S. AD curve shifts rightward by more or less than the U.S. SRAS curve shifts leftward.

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