Brexit expected to rattle U.S. economy, the United Kingdom vote to leave the European Union (known as

€œBrexit€ expected to rattle U.S. economy, the United Kingdom vote to leave the European Union (known as Brexit) is expected to affect the U.S. economy by driving up the value of the dollar. But it is not thought that Brexit alone will shrink the U.S. economy.

Explain how a high value of the dollar affects U.S. real GDP and on an AS-AD graph show the macroeconomic equilibrium in the U.S. economy with and without the effects of Brexit.

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FIGURE 13.4 Chapter Checkpoint Assignable Problem 7 Price level (GDP price index) AS, Potential GDP ASo 130 120 ...... 110 100 90 .... AD 15.0 15.5 16.0 16.5 17.0 17.5 Real GDP (trillions of 2009 dollars)