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Suppose that last year $1 U.S. exchanged for 2.2 Euros. This year, however, $1 exchanges for 2.3 Euros. As a result of this stronger dollar,
Suppose that last year $1 U.S. exchanged for 2.2 Euros. This year, however, $1 exchanges for 2.3 Euros. As a result of this stronger dollar, the United States' short-run aggregate (SRAS) curve shifted to the right. Why did the stronger dollar cause SRAS to increase?
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