If the national incomes of our trading partners increase, then our
A) aggregate demand decreases because C decreases.
B) aggregate demand increases because C increases.
C) aggregate demand decreases because net exports decrease.
D) aggregate demand increases because net exports increase.

Question

Quizplus · Accepted Answer

If the national incomes of our trading partners increase, their purchasing power increases, leading to an increase in demand for our exports. This results in an increase in net exports, which, being a component of aggregate demand, increases the aggregate demand.

If the National Incomes of Our Trading Partners Increase, Then