What does the foreign-trade effect explain?
A)The shape of the aggregate demand curve.
B)The shape of the aggregate supply curve.
C)The change in the aggregate demand curve.
D)The change in the aggregate supply curve.
E)The change in economic growth.

Question

Quizplus · Accepted Answer

The foreign-trade effect explains why the aggregate demand curve slopes downward; as the price level in a country decreases, its goods and services become cheaper to foreigners, increasing exports and decreasing imports, which increases aggregate demand.

What Does the Foreign-Trade Effect Explain