📚 Learning Guide
Graphing Economic Impacts
medium

If an increase in income levels in Country A leads to a rightward shift in the aggregate demand curve for Country B's goods, it can be concluded that Country B will experience a corresponding increase in its overall economic output.

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Learning Path
Learning Path

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Choose the Best Answer

A

True

B

False

Understanding the Answer

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Answer

When people in Country A earn more money, they tend to buy more goods and services, including those from Country B. This increase in demand from Country A causes the aggregate demand curve for Country B's products to shift to the right. As a result, businesses in Country B will need to produce more to meet this higher demand, which can lead to an increase in overall economic output. For example, if Country A starts buying more cars from Country B because people have more income, Country B's car manufacturers will produce more cars, hire more workers, and boost their economy. Therefore, the increased income in Country A positively affects the economy of Country B through higher demand for its goods.

Detailed Explanation

When people in Country A earn more money, they buy more goods from Country B. Other options are incorrect because Some might think that Country B's economy won't change.

Key Concepts

Aggregate Demand and Supply
Economic Interdependence
Shifts in Economic Curves
Topic

Graphing Economic Impacts

Difficulty

medium level question

Cognitive Level

understand

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