Question

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would a. rise, making aggregate demand shift right. b. rise, making aggregate demand shift left. c. fall, making aggregate demand shift right. d. fall, making aggregate demand shift left.

Answer 1

Answer:

The correct answer is option d.

Explanation:

The net exports are calculated by deducting imports from exports. Imports of goods and services of a country from the US is exports for the US. So if the imports are declining it means exports from the US is declining. This would cause net exports to decline.  

Net export is a component of aggregate demand. The decline in net exports would cause aggregate demand to fall as well. Consequently, the aggregate demand curve would shift leftwards.