Question

1. What role do imports play in aggregate demand? Under which conditions will changes in imports...

1. What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?

2. Identify factors that would cause consumption spending to increase. What effect would that have on aggregate demand?

3.. Explain the concept of autonomous consumption.

Note :- Please avoid Plagiarism

              

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Answer #1

Answer 1 -

AD is derived by the formula C + I + G + (export - Import). As per this formula , the imports reduce the value of AD. The greater will be imports , smaller will be value of AD. When the demand for imports is less , the value of Net export will rise . This will happen when currency of foreign country is stronger. This will lead to greater value of AD. But when imports are cheaper , Net exports will fall due to greater imports and Hence result in lesser value of AD.

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