Suppose the Dollar Appreciates in the Foreign Exchange Markets

question 117

Multiple Choice

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

• A)It must rise because dollar appreciation shifts the U.S.AD curve leftward.
• B)It must fall because dollar appreciation shifts the U.S.SRAS curve rightward.
• C)It must remain constant since dollar appreciation does not affect either the U.S.AD curve or the U.S.SRAS curve.
• D)It may rise,fall,or remain constant depending on whether the U.S.AD curve shifts leftward by more,less,or an amount equal to the rightward shift of the U.S.SRAS curve.

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