The international effect explanation of the downward slope of the AD operates through which component of aggregate demand?
A) consumption
B) net exports
C) investment
D) government purchases.

Question

Quizplus · Accepted Answer

The international effect explanation of the downward slope of the AD curve operates through net exports, which represent the amount of goods and services that a country exports minus the amount that it imports. As the price level increases, foreign buyers find it more expensive to purchase goods and services from the country, leading to a decrease in net exports and a decrease in aggregate demand.

The International Effect Explanation of the Downward Slope of the AD