If a country experiences an increase in foreign demand for its exports, how would this situation primarily affect its aggregate demand and unemployment levels? Classify the outcome into one of the following categories: A) Increased aggregate demand leading to decreased unemployment, B) Decreased aggregate demand leading to increased unemployment, C) No effect on aggregate demand or unemployment, D) Increased aggregate demand with no effect on unemployment.

When a country sees an increase in foreign demand for its exports, this means that other countries want to buy more of what it produces. As a result, the country’s aggregate demand rises because more goods are being sold, leading to higher overall spending in the economy. This increased demand often leads businesses to produce more, which typically requires hiring more workers. Therefore, we can expect that this situation will lead to increased aggregate demand and decreased unemployment, fitting into category A. For example, if a country known for producing cars starts selling more vehicles abroad, car manufacturers will need to hire additional workers to meet the rising orders.