AP Macroeconomics Flashcards: Changes in the Foreign Exchange Market and Net Exports
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 10 cards to help you master important concepts.
What happens to a country's exports and imports when its currency appreciates?
Factors that cause a currency to appreciate cause that country’s exports to decrease and its imports to increase.
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What happens to a country's exports and imports when its currency appreciates?
Factors that cause a currency to appreciate cause that country’s exports to decrease and its imports to increase.
If a country's currency depreciates, what is the resulting impact on its aggregate demand?
Currency depreciation causes net exports to increase, which in turn causes the country's aggregate demand to increase (shift right).
If a country's currency appreciates, what is the resulting impact on its aggregate demand?
Currency appreciation causes net exports to decrease, which in turn causes the country's aggregate demand to decrease (shift left).
How does a change in the value of a currency affect a country's aggregate demand?
Changes in currency value lead to changes in net exports, which is a component of aggregate demand, thus causing aggregate demand to shift.
What happens to a country's exports and imports when its currency depreciates?
Factors that cause a currency to depreciate cause that country’s exports to increase and its imports to decrease.
How are changes in net exports linked to changes in output, employment, and the price level?
Changes in net exports affect aggregate demand, which in turn causes resulting effects on a country's real output, employment, and price level.
What is the overall effect of currency appreciation on net exports?
When a country's currency appreciates, its net exports will decrease because exports fall while imports rise.
What is the overall effect of currency depreciation on net exports?
When a country's currency depreciates, its net exports will increase because exports rise while imports fall.
Trace the chain of events from currency appreciation to the change in net exports.
Appreciation makes a country's goods more expensive for foreigners and foreign goods cheaper domestically, causing exports to fall, imports to rise, and net exports to decrease.
Trace the chain of events from currency depreciation to the change in net exports.
Depreciation makes a country's goods cheaper for foreigners and foreign goods more expensive domestically, causing exports to rise, imports to fall, and net exports to increase.