If trade policies change, then we would expect aggregate expenditure to:
A) increase.
B) decrease.
C) remain constant.
D) depends on the policy.

Question

Quizplus · Accepted Answer

The effect of trade policy changes on aggregate expenditure depends on the specific details of the policy. Some trade policies, such as an increase in tariffs, may lead to a decrease in aggregate expenditure as imports become more expensive and consumers have less purchasing power. Other trade policies, such as reducing barriers to trade, may lead to an increase in aggregate expenditure as trade becomes easier and more efficient. Therefore, it's difficult to make a general prediction about the effect of trade policy changes on aggregate expenditure.

If Trade Policies Change, Then We Would Expect Aggregate Expenditure