Suppose the Dollar Appreciates in Value in the Foreign Exchange

question 49

Multiple Choice

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

• A) It rises because dollar appreciation shifts the U.S. AD curve leftward.
• B) It falls because dollar appreciation shifts the U.S. SRAS curve rightward.
• C) There is no effect on Real GDP since dollar appreciation 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 leftward by more or less than the U.S. SRAS curve shifts rightward.

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