International trade and money flows can increase aggregate supply and aggregate demand if
A)Trade barriers are increased.
B)Trade barriers are reduced.
C)Tariffs are increased.
D)Quotas are increased.

Question

Quizplus · Accepted Answer

When trade barriers are reduced, countries can trade more freely with each other which can lead to an increase in aggregate demand as there is an increase in the level of exports. This can in turn lead to an increase in aggregate supply as firms may need to hire more workers or invest in more capital to produce more goods to meet the increasing demand. This increase in aggregate demand and supply can have a positive effect on economic growth and development. Therefore, reducing trade barriers is the best option to increase international trade and money flows.

International Trade and Money Flows Can Increase Aggregate Supply and Aggregate