The trade balance component of aggregate demand is a function of all the following, EXCEPT:
A) foreign disposable income.
B) domestic disposable income.
C) the real exchange rate.
D) consumer spending.

Question

Quizplus · Accepted Answer

The trade balance component of aggregate demand is affected by foreign and domestic disposable income and the real exchange rate. While consumer spending can indirectly affect the trade balance by influencing imports and exports, it is not one of the direct determinants of the trade balance component of aggregate demand.

The Trade Balance Component of Aggregate Demand Is a Function