An increase in the demand for our exports
A)increases aggregate demand and income by the amount of the investment multiplier.
B)increases imports as well,having no impact on aggregate demand.
C)increases aggregate demand and income by less than the amount of the investment multiplier.
D)does not impact aggregate demand because this is consumption by foreign countries.

Question

Quizplus · Accepted Answer

An increase in the demand for exports leads to an increase in the aggregate demand for goods and services, which in turn increases the level of income. This is because when exports increase, the domestic production of goods and services also increases, leading to an increase in the level of employment and output. As a result, the aggregate demand for goods and services increases by the amount of the investment multiplier.

An Increase in the Demand for Our Exports