Use the international trade effect to explain why our aggregate demand curve is downward sloping
When the price level in the United States rises relative to the price level in other countries, American goods are more expensive for foreigners so they buy less while foreign goods are less expensive for Americans so they buy more of them. That is, U.S. exports decrease and imports increase so that when the price level in the U.S. increases, the aggregate quantity demanded in the U.S. decreases.
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If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?
A. An increase in quantity of unskilled labor demanded. B. A decrease in the quantity of unskilled labor supplied. C. A shortage of unskilled labor. D. A surplus of unskilled labor (unemployment).
Which of the following expenditures would increase the consumption component of U.S. GDP?
A. You buy a used book about finance. B. You buy 1,000 shares of stock. C. You buy a new house. D. You buy a pizza.