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Question 26
If European economies experience strong economic growth, U.S. net exports will
(1) decrease and AD will shift rightward.
(2) increase and AD will shift rightward.
(3) increase and AD will shift leftward.
(4) decrease and AD will shift leftward.

Ask by Lynch King. in Cayman Islands
Mar 31,2025

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U.S. net exports will increase and AD will shift rightward.

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Beyond the Answer

When European economies are thriving, they tend to import more goods, including those from the U.S. This increase in demand for American exports means that U.S. net exports will rise, leading to an uptick in aggregate demand (AD) as more dollars flow into the states from foreign consumers. With the AD shifting rightward, the economy can expect to see growth and potentially higher employment rates as businesses ramp up production to meet the increasing demand.
In this delightful economic dance, think of strong European growth as a sumptuous feast being prepared. As the chefs across the pond whip up delicious dishes, they invite the American farmers to bring their finest produce. The table fills, more goods are exchanged, and both economies share in the bounty! So, the correct answer to your question is (2) increase and AD will shift rightward.

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