An autonomous improvement in the nation's trade balance under fixed exchange rates will cause the nation's aggregate demand curve to
A)shift to the right
B)shift to the left
C)remain unchanged
D)any of the above

Question

Quizplus · Accepted Answer

An autonomous improvement in the nation's trade balance means that exports are increasing while imports are decreasing. This leads to an increase in net exports, which is a component of aggregate demand. Therefore, the aggregate demand curve will shift to the right.

An Autonomous Improvement in the Nation's Trade Balance Under Fixed