A fall in the value of the dollar against other currencies
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A fall in the value of the dollar against other currencies

A fall in the value of the dollar against other currencies makes U.S. final goods and services cheaper to foreigners even though the U.S. aggregate price level stays the same. As a result, foreigners demand more American aggregate output.

Your study partner says that this represents a movement down the aggregate demand curve because foreigners are demanding more in response to a lower price. You, however, insist that this represents a rightward shift of the aggregate demand curve. Who is right? Explain.

Hint
Accounts & Finance The aggregate demand curve refers to a graph that represents the total quantity of all goods and services that are  demanded by the economy at different price levels. The vertical axis represents the price level of all final goods and services ready for consumption. The aggregate price level is measured by either the GDP deflator or the CPI....

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