Chapter 17, Problem 7MCQ

To determine

The question requires us to determine to factor effect that changes the real GDP.

Explanation of Solution

The aggregate demand curve represents the relationship between the price level and aggregate quantity demanded by households, firms, the government, and foreign nations.

The net export effect or exchange rate effect of a price change is a change in net export when the value of domestic currency changes and causes the relative price of domestically produced goods and services and foreign goods and services to change.

Thus, option “b” is correct.