A Depreciation Increases AD in the Short Run An increase in the growth rate of the money supply pushes the exchange rate down (a depreciation). As a result, exports increase, AD increases, and the growth rate increases, moving the economy from point a to point b. In the long run, the domestic inflation rate increases enough to restore the real exchange rate so there is no longer a boost to exports and the economy moves to a new long-run equilibrium at point c.