Asked by Torye Smith on Jul 07, 2024
Verified
If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.
Foreign-Currency Exchange
The process of exchanging one currency for another, which involves determining the rate at which two currencies will be swapped.
Aggregate Demand
The total demand for all goods and services within a particular market or economy at various price levels, during a specified time period.
- Gain an understanding of the constituents and determinants of overall demand.
- Acknowledge the consequences of price level variations on consumption, investment, and net exports.
Verified Answer
MR
Michaela RuarkJul 14, 2024
Final Answer :
True
Explanation :
When speculators bid up the value of the dollar, it becomes stronger compared to other currencies. This makes U.S. goods more expensive for foreign buyers, reducing exports. At the same time, imports become cheaper for U.S. consumers, leading to a decrease in domestic production and a shift of the U.S. aggregate demand to the left.
Learning Objectives
- Gain an understanding of the constituents and determinants of overall demand.
- Acknowledge the consequences of price level variations on consumption, investment, and net exports.
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