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Back to Unit 6 Cheat Sheet

Changes in the Foreign Exchange Market and Net Exports

AP Macro - 6.5

Currency depreciation makes exports cheaper for foreigners and imports more expensive for domestic consumers, increasing net exports (X - M) and shifting aggregate demand right. Currency appreciation has the opposite effect, decreasing net exports and shifting aggregate demand left.

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Practice Questions: Test Your Understanding

Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.

Question 1 of 3

If the U.S. dollar significantly appreciates against the Euro, what is the most likely impact on U.S. net exports?

U.S. net exports will increase.
U.S. net exports will decrease.
U.S. net exports will remain unchanged.
U.S. exports will increase, and imports will decrease.
Both U.S. exports and imports will increase.

Key Takeaways

  • 📊
    Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
  • ✅
    Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.