Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times. His good fortune is likely to impact U.S. aggregate demand in what way?
A)Positively, because he prefers to make all his purchases in Canada from Canadian firms.
B)Negatively, because he prefers to make all his purchases in Canada from Canadian firms.
C)Negatively, since we are all members of North American Free Trade Zone.
D)Positively, since he will be in a better position to purchase U.S.-made goods.

Question

Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times. His good fortune is likely to impact U.S. aggregate demand in what way?
A)​Positively, because he prefers to make all his purchases in Canada from Canadian firms.
B)​Negatively, because he prefers to make all his purchases in Canada from Canadian firms.
C)​Negatively, since we are all members of North American Free Trade Zone.
D)​Positively, since he will be in a better position to purchase U.S.-made goods.

Quizplus · Accepted Answer

Pierre's good economic times mean that he has more purchasing power, which means he may be more likely to purchase U.S.-made goods. Since the U.S. and Canada are part of the North American Free Trade Zone, there are no tariffs or other barriers to trade, so Pierre's purchases would not negatively impact U.S. aggregate demand. Thus, his purchasing power is likely to have a positive impact on U.S. aggregate demand.

Pierre Is French Canadian, and Like Many Canadians He Is