ECONOMICS
AGGREGATE DEMAND
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
A trade surplus and shifts AD right
|
|
|
A trade surplus and shifts AD left
|
|
|
A trade deficit and shifts AD left
|
|
|
A trade deficit and shifts AD right
|
Detailed explanation-1: -The aggregate demand curve, or AD curve, shifts to the right as the components of aggregate demand-consumption spending, investment spending, government spending, and spending on exports minus imports-rise. The AD curve will shift back to the left as these components fall.
Detailed explanation-2: -An increase in consumption, investment, government purchases, or net exports shifts the aggregate demand curve AD 1 to the right as shown in Panel (a).
Detailed explanation-3: -A trade surplus means that X>M – therefore aggregate demand (AD) will increase.
Detailed explanation-4: -A positive net export number indicates a trade surplus, while a negative number means a trade deficit. A weak currency exchange rate makes a nation’s exports more competitive in price in other countries. Countries with comparative advantages such as natural resources or a skilled workforce tend to be net exporters.