Draw the graph · Macro · Aggregate demand and aggregate supply
The currency appreciates
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.
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Aggregate demand shifts left. Short-run aggregate supply stays put. Long-run aggregate supply stays put.
Net exports are a component of aggregate demand. A stronger currency cuts exports and raises imports, so net exports fall and total spending on domestic output falls at every price level. AD shifts left. The supply side is unchanged.
The price level falls and real GDP falls, opening a recessionary gap.
Common mistake. Students sometimes shift SRAS right because 'imported inputs get cheaper.' That effect exists but is usually second-order. The exam-standard answer is the fall in net exports, which is AD.
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Lesson: Aggregate Demand