A fall in the value of the Canadian dollar against other currencies makes Canadian final goods and
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A fall in the value of the Canadian dollar against other currencies makes Canadian final goods and services cheaper to foreigners even though the Canadian aggregate price level stays the same. As a result, foreigners demand more Canadian 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.
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Related Book For
Macroeconomics
ISBN: 978-1319120054
3rd Canadian edition
Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson
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