What would be the impact on aggregate demand (AD)if exports and imports both fell,but exports fell more than imports?
A)AD would increase.
B)AD could either increase or decrease.
C)AD would be unaffected.
D)AD would decrease.

Question

Quizplus · Accepted Answer

A fall in exports would result in a decrease in AD as there would be a lower demand for goods and services produced domestically. Although a fall in imports would increase the demand for domestically produced goods in the short run, if exports fall more than imports, the overall effect would be a decrease in AD.

What Would Be the Impact on Aggregate Demand (AD)if Exports