When the dollar depreciates against foreign currencies,
exports should increase and imports should decrease. This is because our products get
cheaper for foreigners and their products get to me more expensive for
us.
In such a case, there gets to be increased demand for
American products. That means that aggregate demand goes
up.
If households expect lower prices (I assume for all
goods and services) in the future, AD goes down because people will wait to buy until
the prices actually do drop. In other words, if you think the car that you can buy for
$25,000 is going to cost $20,000 in 6 months, you really ought to wait if you
can.
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