Question

Which of the following would decrease aggregate demand? a) an improvement in consumer confidence b) a decrease in the foreign exchange value of the dollar c) an increase in the relative price of domestic goods versus foreign goods d) a decrease in taxes

Answer 1

Answer:  Option B

                                 

Explanation: In simple words, aggregate demand refers to the total amount of goods and services that the consumers are willing to consume at a specific price and in a specified time.

A decrease in dollar value will result in less purchasing power for imports. This will result in less supply which will ultimately increase the price of the imported quantity, thus, resulting in decrease in aggregate demand.