Principles of Macroeconomics / Unit 13 MAC 1216 short lesson, about 20 seconds
Exchange Rates and Aggregate Demand
Captions available
The idea
A weaker home currency makes exports cheaper abroad and imports dearer at home, so net exports rise and aggregate demand shifts right. A stronger currency does the reverse.
In practice
This is the exchange-rate channel unit twelve put in the transmission chain.
Where people slip
Imports are not a loss. The currency spent abroad returns as demand for goods or assets, as unit seven showed.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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