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QUESTION 6 The aggregate demand curve would shift to the right as a result of a drop in the foreign exchange value of the dolQUESTION 16 According to Keynesian economics using the modern short-run aggregate supply curve, if there are unutilized resouSuppose that last year $1 U.S. exchanged for 1 euro. If this year $1 exchanges for 0.90 euro we can conclude that the dollar

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Answer 16- The aggregate demand curve would shift to the right as a result of

- a drop in the foreign exchange value of the dollar.

Explanation- a drop in the foreign exchange rate is known as a depreciation in the exchange rate. It means Currency is worthless as compared to other countries. When there is a depreciation, exports will be cheaper and imports will become more expensive. This increase in (X - M) will help increase the aggregate demand and therefore leads to economic growth.

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