A fall in a foreign country's income will most likely cause:
A)a reduction in U.S. exports, so the U.S. aggregate demand curve shifts left.
B)a reduction in U.S. exports, so the U.S. aggregate demand curve shifts right.
C)an increase in U.S. exports, so the U.S. aggregate demand curve shifts left.
D)an increase in U.S. exports, so the U.S. aggregate demand curve shifts right.

Question

Quizplus · Accepted Answer

When a foreign country's income falls, its residents buy fewer goods, including fewer imports from the U.S. This leads to a reduction in U.S. exports, which is a component of aggregate demand. Therefore, the U.S. aggregate demand curve shifts to the left.

A Fall in a Foreign Country's Income Will Most Likely