A fall in the value of the dollar against other currencies makes U. S. final goods and services cheaper to foreigners even though the U. S. aggregate price level stays the same. As a result, foreigners demand more American aggregate output. Your study partner says that this represents a movement down the aggregate demand curve because foreigners are demanding more in response to a lower price. You, however, insist that this represents a rightward shift of the aggregate demand curve. Who is right

You are right.

Explanation:

Aggregate demand is defined as the sum total of all goods and services that are demanded in a particular country. It is also called effective demand.

When there is a shift in demand, the quantity demanded of a product changes as a result of other factors apart from price.

In this scenario dollar value price falls this results in cheaper American goods and as a result there is increase in demand at all price levels. Demand shifts to the right.

Note the price level in America rains the same and the increased demand is as a result of foreign exchange changes.

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