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A fall in the value of the US dollar against other currencies makes US final goods and services cheaper to foreigners even though the US 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. (1 paragraph)

Business Economics, Economics

  • Category:- Business Economics
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