01 pts ct Question 2 correct Assume Chinese people on averag

0/1 pts ct Question 2 correct Assume Chinese people on average have fast-rising income as a result of positive economic growth. How might this affect the AD curve for the United States? The United States\' AD curve will shift outward because of an increase in US EXPORTS This will not affect the United States, it only will affect China. The United States\' AD curve will shift outward because of an increase in US IMPORTS The United States\' AD curve will shift outward because of an increase in CONSUMPTION The United States\' AD curve will shift inward because of an increase in IMPORTS The United States\' AD curve will shift inward because of an increase in EXPORTS

Solution

With increase in income, chinese people will increase their demand for import. If they are trading with USA, they will increase their demand for imported goods from USA. This will increase USA\'s export as well. As a result, net export of USA will increase and Aggregate demand will increase (as AD = consumption + investment + government expenditure + net export). Therefore, US\' AD curve will shift outward with increase in US Export.

Answer- option A