A fall in the value of the dollar against other currencies makes U.S.

4. A fall in the value of the dollar against other currencies makes U.S. final goods and services cheaper to foreigners even though the U.S. aggregate price level stays thesame. As a result, foreigners demand more American aggregateoutput. Your study partner says that this represents a movementd…
The aggregate demand curve is on a plotwith aggregate US output on the X-axis and the US aggregateprice level on the Y-axis. If you want to know what happensto output demanded in response to changes in the US aggregate pricelevel, you shift ALONG the demand curve. If anything elseexcept US aggregate price level changes, you’re shifting the entirecurve. For example,…

if interest rates fall, that increasesinvestment and shifts the curve to the right..Note that, while foreigners are indeed responding to a lowerprice, the lower price in question is in the price the foreignnationals are paying, not the US prices.

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