ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An increase in unemployment in Mordor
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an decrease in aggregate demand in Mordor
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an increase in aggregate demand in Mordor
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a decrease in the price level in Mordor
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Detailed explanation-1: -An increase in exports means the rightward shift in the aggregate demand curve. It means aggregate demand increases with the same aggregate supply curve such that both price level and aggregate output rise into an economy.
Detailed explanation-2: -Aggregate demand increases when the components of aggregate demand–including consumption spending, investment spending, government spending, and spending on exports minus imports–rise.
Detailed explanation-3: -Exports are products produced domestically and sold abroad, and imports are products produced abroad but purchased domestically. Since aggregate demand is defined as spending on domestic goods and services, export expenditures add to aggregate demand, while import expenditures subtract from aggregate demand.
Detailed explanation-4: -For open economy aggregate demand is equal to Consumption + Investment + Government expenditure.