If both imports and exports fell,
A)AD would decrease.
B)AD would increase.
C)AD would decrease if exports fell more than imports.
D)AD would increase if exports fell more than imports.

Question

If both imports and exports fell,
A)​AD would decrease.
B)​AD would increase.
C)​AD would decrease if exports fell more than imports.
D)​AD would increase if exports fell more than imports.

Quizplus · Accepted Answer

AD (Aggregate Demand) would decrease if exports fell more than imports because the country would be losing more from the decrease in exports than it would be gaining from the decrease in imports, leading to a net decrease in national income and thus a decrease in aggregate demand.

If Both Imports and Exports Fell