The diagram illustrates aggregate demand (AD) and aggregate supply (AS) for a country. The starting equilibrium is located at point E. The combined price elasticities of demand for imports and exports in this country are greater than one. A devaluation of the country’s exchange rate will lead to a change in aggregate demand. What will be the new equilibrium?
- Apoint A
- Bpoint B
- Cpoint C
- Dpoint D