Which of the above diagrams best portrays the effects of an increase in foreign spending on our products?
A)A
B)B
C)C

Question

Which of the above diagrams best portrays the effects of an increase in foreign spending on our products?
A)A 
B)B 
C)C

Quizplus · Accepted Answer

In diagram C, an increase in foreign spending causes an upward shift in the Aggregate Demand curve, leading to an increase in both real GDP and the price level. This indicates an increase in demand for our products, which leads to higher production and ultimately higher price levels.

Which of the Above Diagrams Best Portrays the Effects of an Increase