Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:

Which of the following best describes a deliberate government decision to lower the exchange rate, E?

A) appreciation B) depreciation C) revaluation D) devaluation E) accumulation

Which of the following is most likely to result from a stronger dollar?

A) U.S. goods exported aboard will cost less in foreign countries, and so foreigners will buy more of them. B) U.S. goods exported aboard will cost more in foreign countries and so foreigners will buy more of them. C) U.S. goods exported abroad will cost more in foreign countries, and so foreigners will buy fewer of them. D) Americans will purchase fewer foreign goods.