When national income in other nations decreases, aggregate demand in our economy:
A) Increases because our exports will increase
B) Decreases because our exports will decrease
C) Increases because our imports will decrease
D) Decreases because our imports will increase

Question

Quizplus · Accepted Answer

When national income in other nations decreases, their purchasing power decreases as well. This means they can afford to buy fewer goods and services from other countries, including ours. As a result, our exports will decrease, leading to a decrease in aggregate demand in our economy.

When National Income in Other Nations Decreases, Aggregate Demand in Our