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The exchange-rate effect is one of the reasons why the aggregate demand curve is downward sloping.

a. True
b. False

User Bebbi
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1 Answer

2 votes

Answer:

True.

Step-by-step explanation:

True, the given statement is right because the exchange rate or price of the currency is inversely related to the demand. when the exchange rate increases that means the price of the currency is increasing and in that case, the demand for the currency falls. If the exchange rate falls or the price of currency falls then demand for the currency rises that indicate the inverse relationship between the exchange rate and the aggregate demand. therefore, the aggregate demand curve is sloping downwards.

User Marjory
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