How does an increase in foreign income influence Canadian aggregate demand?

Question

Accepted Answer

It increases Canadian exports, which increases Canada's aggregate demand.

Answer

It increases Canadian imports, which creates a movement along Canada's aggregate demand curve.

Answer

Foreigners start to substitute home-produced goods for Canadian goods, so the aggregate demand for Canadian goods decreases.

Answer

It increases Canadian imports, which decreases Canada's aggregate demand.

Answer

It increases Canadian exports, which creates a movement downward along Canada's aggregate demand curve.

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