Principles of Economics- Mankiw (5th) 687

Principles of Economics- Mankiw (5th) 687 - CHAPTER 31 A G...

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CHAPTER 31 AGGREGATE DEMAND AND AGGREGATE SUPPLY 711 the left. When Europe recovers from its recession, it starts buying U.S. goods again, shifting the aggregate-demand curve to the right. Net exports sometimes change because of movements in the exchange rate. Suppose, for instance, that international speculators bid up the value of the U.S. dollar in the market for foreign-currency exchange. This appreciation of the dollar would make U.S. goods more expensive compared to foreign goods, which would depress net exports and shift the aggregate-demand curve to the left. Conversely, a depreciation of the dollar stimulates net exports and shifts the aggregate- demand curve to the right. Summary In the next chapter we analyze the aggregate-demand curve in more detail. There we examine more precisely how the tools of monetary and fis- cal policy can shift aggregate demand and whether policymakers should use these tools for that purpose. At this point, however, you should have some idea about
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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