How will a recession in the economies of our foreign trading partners affect U.S. aggregate demand?
A) It will have no effect on our aggregate demand.
B) U.S. aggregate demand will increase.
C) U.S. aggregate demand will decrease.
D) It depends on whether the U.S. offers financial aid to these countries.

Question

Quizplus · Accepted Answer

A recession in the economies of our foreign trading partners will likely decrease their demand for U.S. exports, which will decrease U.S. aggregate demand as our exports make up a portion of it. Additionally, a decrease in economic activity globally could lead to decreased investment from foreign countries into the U.S., further decreasing aggregate demand.

How Will a Recession in the Economies of Our Foreign