Learning Path
Question & Answer1
Understand Question2
Review Options3
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Explore TopicChoose the Best Answer
A
Aggregate demand increases, leading to a decrease in cyclical unemployment.
B
Aggregate demand decreases, resulting in higher unemployment rates.
C
Aggregate demand remains unchanged, but structural unemployment rises.
D
Aggregate demand increases, which may lead to an increase in frictional unemployment.
Understanding the Answer
Let's break down why this is correct
Answer
When a country has an increase in net exports, it means that it is selling more goods and services to other countries than it is buying from them. This increase leads to higher demand for the country's products, which boosts overall economic activity. As businesses produce more to meet this demand, they often need to hire more workers, which can reduce unemployment. For example, if a country exports more cars, car manufacturers may hire additional workers to keep up with orders, resulting in more jobs available. Therefore, an increase in net exports typically raises aggregate demand and lowers unemployment in the economy.
Detailed Explanation
When a country sells more goods to other countries, it earns more money. Other options are incorrect because Some might think that if demand goes down, unemployment goes up; This option suggests that demand stays the same, but that’s not true.
Key Concepts
Aggregate Demand
Unemployment
Net Exports
Topic
Aggregate Demand and Unemployment
Difficulty
hard level question
Cognitive Level
understand
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