Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It increases aggregate demand and decreases cyclical unemployment.
B
It decreases aggregate demand and increases structural unemployment.
C
It has no effect on aggregate demand but increases frictional unemployment.
D
It decreases both aggregate demand and unemployment.
Understanding the Answer
Let's break down why this is correct
Answer
When net exports increase, it means that a country is selling more goods and services to other countries than it is buying from them. This rise in exports boosts the overall demand for products made in that country, leading to higher aggregate demand. As businesses see more demand, they may hire additional workers to produce more goods, which can lower unemployment rates. For example, if a country exports more cars, car manufacturers may need to employ more people to keep up with orders. Overall, an increase in net exports can create a positive cycle of more jobs and increased economic activity.
Detailed Explanation
When net exports go up, it means we sell more goods to other countries. Other options are incorrect because This answer suggests that higher net exports lower demand, which is wrong; This option claims there is no effect on demand, which is incorrect.
Key Concepts
Aggregate Demand
Unemployment
Net Exports
Topic
Aggregate Demand and Unemployment
Difficulty
easy level question
Cognitive Level
understand
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